Correlation Between BQE Water and Ambipar Emergency

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

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

Diversification Opportunities for BQE Water and Ambipar Emergency

-0.16

Correlation Coefficient

BQE Water  Ambipar Emergency

Good diversification

The 3 months correlation between BQE and Ambipar is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BQE Water and Ambipar Emergency Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Emergency and BQE Water 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 BQE Water 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 BQE Water i.e., BQE Water and Ambipar Emergency go up and down completely randomly.

Pair Corralation between BQE Water and Ambipar Emergency

Assuming the 90 days horizon BQE Water is expected to under-perform the Ambipar Emergency. But the pink sheet apears to be less risky and, when comparing its historical volatility, BQE Water is 1.64 times less risky than Ambipar Emergency. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Ambipar Emergency Response is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  432.00  in Ambipar Emergency Response on August 28, 2024 and sell it today you would earn a total of  73.00  from holding Ambipar Emergency Response or generate 16.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BQE Water  vs.  Ambipar Emergency Response

BQE Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BQE Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ambipar Emergency

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Emergency Response are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, Ambipar Emergency demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BQE Water and Ambipar Emergency

The main advantage of trading using opposite BQE Water and Ambipar Emergency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BQE Water 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 BQE Water 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.