Correlation Between SIMPAR SA and Ambipar Participaes

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

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

Diversification Opportunities for SIMPAR SA and Ambipar Participaes

-0.74

Correlation Coefficient

SIMPAR SA  Ambipar Participaes

Pay attention - limited upside

The 3 months correlation between SIMPAR and Ambipar is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and SIMPAR SA 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 SIMPAR SA 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 SIMPAR SA i.e., SIMPAR SA and Ambipar Participaes go up and down completely randomly.

Pair Corralation between SIMPAR SA and Ambipar Participaes

Assuming the 90 days trading horizon SIMPAR SA is expected to under-perform the Ambipar Participaes. But the stock apears to be less risky and, when comparing its historical volatility, SIMPAR SA is 1.79 times less risky than Ambipar Participaes. The stock trades about -0.11 of its potential returns per unit of risk. The Ambipar Participaes e is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  6,300  in Ambipar Participaes e on September 3, 2024 and sell it today you would earn a total of  9,799  from holding Ambipar Participaes e or generate 155.54% return on investment over 90 days.

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

SIMPAR SA  vs.  Ambipar Participaes e

SIMPAR SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMPAR SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ambipar Participaes

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Participaes e are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambipar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMPAR SA and Ambipar Participaes

The main advantage of trading using opposite SIMPAR SA and Ambipar Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMPAR SA 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 SIMPAR SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.