Correlation Between Microsoft and Ambipar Participaes

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

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

Diversification Opportunities for Microsoft and Ambipar Participaes

0.46

Correlation Coefficient

Microsoft  Ambipar Participaes

Very weak diversification

The 3 months correlation between Microsoft and Ambipar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Ambipar Participaes go up and down completely randomly.

Pair Corralation between Microsoft and Ambipar Participaes

Assuming the 90 days trading horizon Microsoft is expected to generate 0.28 times more return on investment than Ambipar Participaes. However, Microsoft is 3.57 times less risky than Ambipar Participaes. It trades about 0.4 of its potential returns per unit of risk. Ambipar Participaes e is currently generating about 0.03 per unit of risk. If you would invest  8,719  in Microsoft on April 20, 2025 and sell it today you would earn a total of  3,136  from holding Microsoft or generate 35.97% return on investment over 90 days.

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

Microsoft  vs.  Ambipar Participaes e

Microsoft

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Microsoft sustained solid returns over the last few months and may actually be approaching a breakup point.

Ambipar Participaes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambipar Participaes e are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Ambipar Participaes may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Microsoft and Ambipar Participaes

The main advantage of trading using opposite Microsoft and Ambipar Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.