Correlation Between Ambipar Participaes and Alfa Holdings

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Can any of the company-specific risk be diversified away by investing in both Ambipar Participaes and Alfa Holdings 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 Ambipar Participaes and Alfa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambipar Participaes e and Alfa Holdings SA, you can compare the effects of market volatilities on Ambipar Participaes and Alfa Holdings 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 Ambipar Participaes with a short position of Alfa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambipar Participaes and Alfa Holdings.

Diversification Opportunities for Ambipar Participaes and Alfa Holdings

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ambipar and Alfa is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ambipar Participaes e and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA and Ambipar Participaes 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 Ambipar Participaes e are associated (or correlated) with Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Ambipar Participaes i.e., Ambipar Participaes and Alfa Holdings go up and down completely randomly.

Pair Corralation between Ambipar Participaes and Alfa Holdings

Assuming the 90 days trading horizon Ambipar Participaes e is expected to generate 2.75 times more return on investment than Alfa Holdings. However, Ambipar Participaes is 2.75 times more volatile than Alfa Holdings SA. It trades about 0.3 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about -0.14 per unit of risk. If you would invest  6,983  in Ambipar Participaes e on September 18, 2024 and sell it today you would earn a total of  19,517  from holding Ambipar Participaes e or generate 279.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ambipar Participaes e  vs.  Alfa Holdings SA

 Performance 
       Timeline  
Ambipar Participaes 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
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.
Alfa Holdings SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alfa Holdings 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 and Alfa Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ambipar Participaes and Alfa Holdings

The main advantage of trading using opposite Ambipar Participaes and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambipar Participaes position performs unexpectedly, Alfa Holdings 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 Alfa Holdings will offset losses from the drop in Alfa Holdings' long position.
The idea behind Ambipar Participaes e and Alfa Holdings SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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