Correlation Between Petroreconcavo and Ambipar Participaes

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

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

Diversification Opportunities for Petroreconcavo and Ambipar Participaes

0.67

Correlation Coefficient

Petroreconcavo  Ambipar Participaes

Poor diversification

The 3 months correlation between Petroreconcavo and Ambipar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petroreconcavo SA and Ambipar Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambipar Participaes and Petroreconcavo 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 Petroreconcavo SA 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 Petroreconcavo i.e., Petroreconcavo and Ambipar Participaes go up and down completely randomly.

Pair Corralation between Petroreconcavo and Ambipar Participaes

Assuming the 90 days trading horizon Petroreconcavo SA is expected to generate 0.52 times more return on investment than Ambipar Participaes. However, Petroreconcavo SA is 1.92 times less risky than Ambipar Participaes. It trades about 0.05 of its potential returns per unit of risk. Ambipar Participaes e is currently generating about 0.02 per unit of risk. If you would invest  1,276  in Petroreconcavo SA on April 25, 2025 and sell it today you would earn a total of  79.00  from holding Petroreconcavo SA or generate 6.19% return on investment over 90 days.

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

Petroreconcavo SA  vs.  Ambipar Participaes e

Petroreconcavo SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Petroreconcavo SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Petroreconcavo may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 1 (%) 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 Petroreconcavo and Ambipar Participaes

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

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 Transaction History module to view history of all your transactions and understand their impact on performance.