Correlation Between GDS Holdings and Ambipar Emergency

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

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

Diversification Opportunities for GDS Holdings and Ambipar Emergency

-0.58

Correlation Coefficient

GDS Holdings  Ambipar Emergency

Excellent diversification

The 3 months correlation between GDS and Ambipar is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding GDS Holdings and Ambipar Emergency Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Emergency and GDS Holdings 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 GDS Holdings 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 GDS Holdings i.e., GDS Holdings and Ambipar Emergency go up and down completely randomly.

Pair Corralation between GDS Holdings and Ambipar Emergency

Considering the 90-day investment horizon GDS Holdings is expected to generate 1.64 times more return on investment than Ambipar Emergency. However, GDS Holdings is 1.64 times more volatile than Ambipar Emergency Response. It trades about 0.06 of its potential returns per unit of risk. Ambipar Emergency Response is currently generating about 0.02 per unit of risk. If you would invest  2,352  in GDS Holdings on December 28, 2024 and sell it today you would earn a total of  265.00  from holding GDS Holdings or generate 11.27% return on investment over 90 days.

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

GDS Holdings  vs.  Ambipar Emergency Response

GDS Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GDS Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, GDS Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 GDS Holdings and Ambipar Emergency

The main advantage of trading using opposite GDS Holdings and Ambipar Emergency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDS Holdings 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 GDS Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .