Correlation Between Equifax and Ambipar Emergency

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

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

Diversification Opportunities for Equifax and Ambipar Emergency

0.36

Correlation Coefficient

Equifax  Ambipar Emergency

Weak diversification

The 3 months correlation between Equifax and Ambipar is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Ambipar Emergency Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Emergency and Equifax 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 Equifax 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 Equifax i.e., Equifax and Ambipar Emergency go up and down completely randomly.

Pair Corralation between Equifax and Ambipar Emergency

Considering the 90-day investment horizon Equifax is expected to generate 1.74 times less return on investment than Ambipar Emergency. But when comparing it to its historical volatility, Equifax is 2.33 times less risky than Ambipar Emergency. It trades about 0.03 of its potential returns per unit of risk. Ambipar Emergency Response is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  505.00  in Ambipar Emergency Response on November 19, 2024 and sell it today you would lose (5.00) from holding Ambipar Emergency Response or give up 0.99% of portfolio value over 90 days.

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

Equifax  vs.  Ambipar Emergency Response

Equifax

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equifax are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Equifax is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ambipar Emergency

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Emergency Response are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Ambipar Emergency is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Equifax and Ambipar Emergency

The main advantage of trading using opposite Equifax and Ambipar Emergency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax 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 Equifax 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.