Correlation Between Ambipar Participaes and Marathon Oil

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

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

Diversification Opportunities for Ambipar Participaes and Marathon Oil

0.22

Correlation Coefficient

Ambipar Participaes  Marathon Oil

Modest diversification

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

Pair Corralation between Ambipar Participaes and Marathon Oil

Assuming the 90 days trading horizon Ambipar Participaes e is expected to generate 3.95 times more return on investment than Marathon Oil. However, Ambipar Participaes is 3.95 times more volatile than Marathon Oil. It trades about 0.3 of its potential returns per unit of risk. Marathon Oil is currently generating about 0.14 per unit of risk. If you would invest  6,949  in Ambipar Participaes e on September 17, 2024 and sell it today you would earn a total of  19,902  from holding Ambipar Participaes e or generate 286.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.6%
Values	Daily Returns

Ambipar Participaes e  vs.  Marathon Oil

Ambipar Participaes

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Participaes e are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ambipar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Marathon Oil

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Marathon Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Marathon Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambipar Participaes and Marathon Oil

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

The idea behind Ambipar Participaes e and Marathon Oil 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.