Correlation Between Bavarian Nordic and Ambu AS

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

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

Diversification Opportunities for Bavarian Nordic and Ambu AS

-0.69

Correlation Coefficient

Bavarian Nordic  Ambu AS

Excellent diversification

The 3 months correlation between Bavarian and Ambu is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Ambu AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambu AS and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with Ambu AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambu AS has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Ambu AS go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Ambu AS

Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 1.26 times more return on investment than Ambu AS. However, Bavarian Nordic is 1.26 times more volatile than Ambu AS. It trades about 0.01 of its potential returns per unit of risk. Ambu AS is currently generating about 0.01 per unit of risk. If you would invest  18,250  in Bavarian Nordic on March 31, 2025 and sell it today you would lose (1,310) from holding Bavarian Nordic or give up 7.18% of portfolio value over 90 days.

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

Bavarian Nordic  vs.  Ambu AS

Bavarian Nordic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bavarian Nordic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Bavarian Nordic displayed solid returns over the last few months and may actually be approaching a breakup point.

Ambu AS

Risk-Adjusted Performance

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 July 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bavarian Nordic and Ambu AS

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

The idea behind Bavarian Nordic and Ambu 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.