Correlation Between Ambu AS and Orphazyme

Can any of the company-specific risk be diversified away by investing in both Ambu AS and Orphazyme 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 AS and Orphazyme into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ambu AS and Orphazyme AS, you can compare the effects of market volatilities on Ambu AS and Orphazyme 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 AS with a short position of Orphazyme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambu AS and Orphazyme.

Diversification Opportunities for Ambu AS and Orphazyme

0.22

Correlation Coefficient

Ambu AS  Orphazyme

Modest diversification

The 3 months correlation between Ambu and Orphazyme is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ambu AS and Orphazyme AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orphazyme AS and Ambu AS 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 Orphazyme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orphazyme AS has no effect on the direction of Ambu AS i.e., Ambu AS and Orphazyme go up and down completely randomly.

Pair Corralation between Ambu AS and Orphazyme

Assuming the 90 days trading horizon Ambu AS is expected to under-perform the Orphazyme. But the stock apears to be less risky and, when comparing its historical volatility, Ambu AS is 2.17 times less risky than Orphazyme. The stock trades about -0.1 of its potential returns per unit of risk. The Orphazyme AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  87,990  in Orphazyme AS on September 11, 2024 and sell it today you would earn a total of  7,010  from holding Orphazyme AS or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ambu AS  vs.  Orphazyme AS

Ambu AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambu AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Orphazyme AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orphazyme AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Orphazyme exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambu AS and Orphazyme

The main advantage of trading using opposite Ambu AS and Orphazyme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambu AS position performs unexpectedly, Orphazyme 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 Orphazyme will offset losses from the drop in Orphazyme's long position.

The idea behind Ambu AS and Orphazyme AS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.