Correlation Between Ambipar Participaes and Neogrid Participaes

Can any of the company-specific risk be diversified away by investing in both Ambipar Participaes and Neogrid Participaes 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 Neogrid Participaes 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 Neogrid Participaes SA, you can compare the effects of market volatilities on Ambipar Participaes and Neogrid Participaes 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 Neogrid Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambipar Participaes and Neogrid Participaes.

Diversification Opportunities for Ambipar Participaes and Neogrid Participaes

0.53

Correlation Coefficient

Ambipar Participaes  Neogrid Participaes

Very weak diversification

The 3 months correlation between Ambipar and Neogrid is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ambipar Participaes e and Neogrid Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogrid Participaes 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 Neogrid Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogrid Participaes has no effect on the direction of Ambipar Participaes i.e., Ambipar Participaes and Neogrid Participaes go up and down completely randomly.

Pair Corralation between Ambipar Participaes and Neogrid Participaes

Assuming the 90 days trading horizon Ambipar Participaes e is expected to generate 0.77 times more return on investment than Neogrid Participaes. However, Ambipar Participaes e is 1.29 times less risky than Neogrid Participaes. It trades about -0.04 of its potential returns per unit of risk. Neogrid Participaes SA is currently generating about -0.04 per unit of risk. If you would invest  13,333  in Ambipar Participaes e on December 24, 2024 and sell it today you would lose (1,110) from holding Ambipar Participaes e or give up 8.33% of portfolio value over 90 days.

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

Ambipar Participaes e  vs.  Neogrid Participaes SA

Ambipar Participaes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ambipar Participaes e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Neogrid Participaes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogrid Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ambipar Participaes and Neogrid Participaes

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

The idea behind Ambipar Participaes e and Neogrid Participaes SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.