Correlation Between FDO INV and Ambipar Participaes

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

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

Diversification Opportunities for FDO INV and Ambipar Participaes

-0.4

Correlation Coefficient

FDO INV  Ambipar Participaes

Very good diversification

The 3 months correlation between FDO and Ambipar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FDO INV IMOB and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and FDO INV 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 FDO INV IMOB are associated (or correlated) with Ambipar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambipar Participaes has no effect on the direction of FDO INV i.e., FDO INV and Ambipar Participaes go up and down completely randomly.

Pair Corralation between FDO INV and Ambipar Participaes

Assuming the 90 days trading horizon FDO INV is expected to generate 1.41 times less return on investment than Ambipar Participaes. But when comparing it to its historical volatility, FDO INV IMOB is 9.8 times less risky than Ambipar Participaes. It trades about 0.22 of its potential returns per unit of risk. Ambipar Participaes e is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,432  in Ambipar Participaes e on December 3, 2024 and sell it today you would earn a total of  85.00  from holding Ambipar Participaes e or generate 0.68% return on investment over 90 days.

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

FDO INV IMOB  vs.  Ambipar Participaes e

FDO INV IMOB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, FDO INV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with FDO INV and Ambipar Participaes

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

The idea behind FDO INV IMOB and Ambipar Participaes e 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.