Correlation Between Cia De and Ambipar Participaes

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

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

Diversification Opportunities for Cia De and Ambipar Participaes

0.12

Correlation Coefficient

Cia De  Ambipar Participaes

Average diversification

The 3 months correlation between Cia and Ambipar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Ferro and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and Cia De 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 Cia de Ferro 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 Cia De i.e., Cia De and Ambipar Participaes go up and down completely randomly.

Pair Corralation between Cia De and Ambipar Participaes

Assuming the 90 days trading horizon Cia de Ferro is expected to under-perform the Ambipar Participaes. But the preferred stock apears to be less risky and, when comparing its historical volatility, Cia de Ferro is 3.85 times less risky than Ambipar Participaes. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Ambipar Participaes e is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Ambipar Participaes e on September 14, 2024 and sell it today you would earn a total of  20,141  from holding Ambipar Participaes e or generate 1216.98% return on investment over 90 days.

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

Cia de Ferro  vs.  Ambipar Participaes e

Cia de Ferro

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cia de Ferro are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cia De may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Cia De and Ambipar Participaes

The main advantage of trading using opposite Cia De and Ambipar Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De 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 Cia de Ferro 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.