Correlation Between Ambipar Emergency and Barrett Business

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

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

Diversification Opportunities for Ambipar Emergency and Barrett Business

-0.73

Correlation Coefficient

Ambipar Emergency  Barrett Business

Pay attention - limited upside

The 3 months correlation between Ambipar and Barrett is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ambipar Emergency Response and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services and Ambipar Emergency 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 Emergency Response are associated (or correlated) with Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of Ambipar Emergency i.e., Ambipar Emergency and Barrett Business go up and down completely randomly.

Pair Corralation between Ambipar Emergency and Barrett Business

Given the investment horizon of 90 days Ambipar Emergency Response is expected to generate 7.24 times more return on investment than Barrett Business. However, Ambipar Emergency is 7.24 times more volatile than Barrett Business Services. It trades about 0.02 of its potential returns per unit of risk. Barrett Business Services is currently generating about 0.08 per unit of risk. If you would invest  994.00  in Ambipar Emergency Response on January 31, 2024 and sell it today you would lose (559.00) from holding Ambipar Emergency Response or give up 56.24% of portfolio value over 90 days.

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

Ambipar Emergency Response  vs.  Barrett Business Services

Ambipar Emergency

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambipar Emergency Response has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Barrett Business Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barrett Business Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Barrett Business may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Ambipar Emergency and Barrett Business

The main advantage of trading using opposite Ambipar Emergency and Barrett Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambipar Emergency position performs unexpectedly, Barrett Business 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 Barrett Business will offset losses from the drop in Barrett Business' long position.

The idea behind Ambipar Emergency Response and Barrett Business Services 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.