Correlation Between CRA International and Ambipar Emergency

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

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

Diversification Opportunities for CRA International and Ambipar Emergency

0.71

Correlation Coefficient

CRA International  Ambipar Emergency

Poor diversification

The 3 months correlation between CRA and Ambipar is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and Ambipar Emergency Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Emergency and CRA International 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 CRA International 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 CRA International i.e., CRA International and Ambipar Emergency go up and down completely randomly.

Pair Corralation between CRA International and Ambipar Emergency

Given the investment horizon of 90 days CRA International is expected to generate 2.46 times less return on investment than Ambipar Emergency. But when comparing it to its historical volatility, CRA International is 5.65 times less risky than Ambipar Emergency. It trades about 0.06 of its potential returns per unit of risk. Ambipar Emergency Response is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  986.00  in Ambipar Emergency Response on September 4, 2024 and sell it today you would lose (494.00) from holding Ambipar Emergency Response or give up 50.1% of portfolio value over 90 days.

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

CRA International  vs.  Ambipar Emergency Response

CRA International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ambipar Emergency

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Emergency Response are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Ambipar Emergency demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CRA International and Ambipar Emergency

The main advantage of trading using opposite CRA International and Ambipar Emergency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRA International 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 CRA International 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.