Correlation Between Ambu A/S and Nihon Kohden

Can any of the company-specific risk be diversified away by investing in both Ambu A/S and Nihon Kohden at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ambu A/S and Nihon Kohden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ambu AS and Nihon Kohden Corp, you can compare the effects of market volatilities on Ambu A/S and Nihon Kohden and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ambu A/S with a short position of Nihon Kohden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambu A/S and Nihon Kohden.

Diversification Opportunities for Ambu A/S and Nihon Kohden

-0.05

Correlation Coefficient

Ambu A/S  Nihon Kohden

Good diversification

The 3 months correlation between Ambu and Nihon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ambu AS and Nihon Kohden Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nihon Kohden Corp and Ambu A/S is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ambu AS are associated (or correlated) with Nihon Kohden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nihon Kohden Corp has no effect on the direction of Ambu A/S i.e., Ambu A/S and Nihon Kohden go up and down completely randomly.

Pair Corralation between Ambu A/S and Nihon Kohden

Assuming the 90 days horizon Ambu AS is expected to under-perform the Nihon Kohden. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ambu AS is 4.77 times less risky than Nihon Kohden. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Nihon Kohden Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,244  in Nihon Kohden Corp on May 7, 2025 and sell it today you would lose (105.00) from holding Nihon Kohden Corp or give up 8.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Ambu AS  vs.  Nihon Kohden Corp

Ambu A/S

Risk-Adjusted Performance

Weakest

Over the last 90 days Ambu AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Ambu A/S is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Nihon Kohden Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nihon Kohden Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Nihon Kohden may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Ambu A/S and Nihon Kohden

The main advantage of trading using opposite Ambu A/S and Nihon Kohden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambu A/S position performs unexpectedly, Nihon Kohden can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nihon Kohden will offset losses from the drop in Nihon Kohden's long position.

The idea behind Ambu AS and Nihon Kohden Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.