Correlation Between Isofol Medical and Ambea AB

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

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

Diversification Opportunities for Isofol Medical and Ambea AB

-0.04

Correlation Coefficient

Isofol Medical  Ambea AB

Good diversification

The 3 months correlation between Isofol and Ambea is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Isofol Medical AB and Ambea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambea AB and Isofol Medical 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 Isofol Medical AB are associated (or correlated) with Ambea AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambea AB has no effect on the direction of Isofol Medical i.e., Isofol Medical and Ambea AB go up and down completely randomly.

Pair Corralation between Isofol Medical and Ambea AB

Assuming the 90 days trading horizon Isofol Medical AB is expected to under-perform the Ambea AB. In addition to that, Isofol Medical is 3.71 times more volatile than Ambea AB. It trades about -0.01 of its total potential returns per unit of risk. Ambea AB is currently generating about 0.1 per unit of volatility. If you would invest  9,035  in Ambea AB on September 12, 2024 and sell it today you would earn a total of  925.00  from holding Ambea AB or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Isofol Medical AB  vs.  Ambea AB

Isofol Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Isofol Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Isofol Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ambea AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambea AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambea AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Isofol Medical and Ambea AB

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

The idea behind Isofol Medical AB and Ambea AB 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 Valuation module to check real value of public entities based on technical and fundamental data.