Correlation Between Banco BTG and Ambipar Participaes
Can any of the company-specific risk be diversified away by investing in both Banco BTG 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 Banco BTG and Ambipar Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco BTG Pactual and Ambipar Participaes e, you can compare the effects of market volatilities on Banco BTG 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 Banco BTG with a short position of Ambipar Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco BTG and Ambipar Participaes.
Diversification Opportunities for Banco BTG and Ambipar Participaes
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Ambipar is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and Banco BTG 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 Banco BTG Pactual 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 Banco BTG i.e., Banco BTG and Ambipar Participaes go up and down completely randomly.
Pair Corralation between Banco BTG and Ambipar Participaes
Assuming the 90 days trading horizon Banco BTG is expected to generate 30.25 times less return on investment than Ambipar Participaes. But when comparing it to its historical volatility, Banco BTG Pactual is 3.31 times less risky than Ambipar Participaes. It trades about 0.02 of its potential returns per unit of risk. Ambipar Participaes e is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,098 in Ambipar Participaes e on August 26, 2024 and sell it today you would earn a total of 14,902 from holding Ambipar Participaes e or generate 710.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Banco BTG Pactual vs. Ambipar Participaes e
Performance |
| Timeline |
| Banco BTG Pactual |
| Ambipar Participaes |
Banco BTG and Ambipar Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco BTG and Ambipar Participaes
The main advantage of trading using opposite Banco BTG and Ambipar Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco BTG 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 Banco BTG Pactual 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.| Ambipar Participaes vs. Fras le SA | Ambipar Participaes vs. Western Digital | Ambipar Participaes vs. Clave Indices De | Ambipar Participaes vs. BTG Pactual Logstica |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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