Correlation Between Johnson Johnson and Ambipar Participaes

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

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

Diversification Opportunities for Johnson Johnson and Ambipar Participaes

-0.25

Correlation Coefficient

Johnson Johnson  Ambipar Participaes

Very good diversification

The 3 months correlation between Johnson and Ambipar is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and Johnson Johnson 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 Johnson Johnson 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 Johnson Johnson i.e., Johnson Johnson and Ambipar Participaes go up and down completely randomly.

Pair Corralation between Johnson Johnson and Ambipar Participaes

Assuming the 90 days trading horizon Johnson Johnson is expected to under-perform the Ambipar Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 3.09 times less risky than Ambipar Participaes. The stock trades about -0.05 of its potential returns per unit of risk. The Ambipar Participaes e is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Ambipar Participaes e on April 6, 2025 and sell it today you would earn a total of  3,949  from holding Ambipar Participaes e or generate 32.37% return on investment over 90 days.

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

Johnson Johnson  vs.  Ambipar Participaes e

Johnson Johnson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, Johnson Johnson is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Ambipar Participaes

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Participaes e are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambipar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Johnson and Ambipar Participaes

The main advantage of trading using opposite Johnson Johnson and Ambipar Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson 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 Johnson Johnson 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.