Correlation Between Casella Waste and Ambipar Emergency

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

By analyzing existing cross correlation between Casella Waste Systems and Ambipar Emergency Response, you can compare the effects of market volatilities on Casella Waste and Ambipar Emergency 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 Casella Waste with a short position of Ambipar Emergency. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casella Waste and Ambipar Emergency.

Diversification Opportunities for Casella Waste and Ambipar Emergency

-0.27

Correlation Coefficient

Casella Waste  Ambipar Emergency

Very good diversification

The 3 months correlation between Casella and Ambipar is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Ambipar Emergency Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Emergency and Casella Waste 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 Casella Waste Systems are associated (or correlated) with Ambipar Emergency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambipar Emergency has no effect on the direction of Casella Waste i.e., Casella Waste and Ambipar Emergency go up and down completely randomly.

Pair Corralation between Casella Waste and Ambipar Emergency

Given the investment horizon of 90 days Casella Waste is expected to generate 4.52 times less return on investment than Ambipar Emergency. But when comparing it to its historical volatility, Casella Waste Systems is 7.92 times less risky than Ambipar Emergency. It trades about 0.05 of its potential returns per unit of risk. Ambipar Emergency Response is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  989.00  in Ambipar Emergency Response on September 14, 2024 and sell it today you would lose (439.00) from holding Ambipar Emergency Response or give up 44.39% of portfolio value over 90 days.

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

Casella Waste Systems  vs.  Ambipar Emergency Response

Casella Waste Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Casella Waste is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Ambipar Emergency

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Emergency Response are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental drivers, Ambipar Emergency demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casella Waste and Ambipar Emergency

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

The idea behind Casella Waste Systems and Ambipar Emergency Response 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.