Correlation Between Dometic Group and Ambea AB

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

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

Diversification Opportunities for Dometic Group and Ambea AB

0.54

Correlation Coefficient

Dometic Group  Ambea AB

Very weak diversification

The 3 months correlation between Dometic and Ambea is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dometic Group AB and Ambea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambea AB and Dometic Group 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 Dometic Group 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 Dometic Group i.e., Dometic Group and Ambea AB go up and down completely randomly.

Pair Corralation between Dometic Group and Ambea AB

Assuming the 90 days trading horizon Dometic Group AB is expected to generate 0.95 times more return on investment than Ambea AB. However, Dometic Group AB is 1.05 times less risky than Ambea AB. It trades about 0.23 of its potential returns per unit of risk. Ambea AB is currently generating about 0.16 per unit of risk. If you would invest  7,690  in Dometic Group AB on February 21, 2024 and sell it today you would earn a total of  600.00  from holding Dometic Group AB or generate 7.8% return on investment over 90 days.

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

Dometic Group AB  vs.  Ambea AB

Dometic Group AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dometic Group AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Dometic Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Ambea AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ambea AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambea AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dometic Group and Ambea AB

The main advantage of trading using opposite Dometic Group and Ambea AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dometic Group 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 Dometic Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.