Correlation Between SPS Commerce and Ambarella

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

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

Diversification Opportunities for SPS Commerce and Ambarella

0.04

Correlation Coefficient

SPS Commerce  Ambarella

Significant diversification

The 3 months correlation between SPS and Ambarella is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and Ambarella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambarella and SPS Commerce 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 SPS Commerce are associated (or correlated) with Ambarella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambarella has no effect on the direction of SPS Commerce i.e., SPS Commerce and Ambarella go up and down completely randomly.

Pair Corralation between SPS Commerce and Ambarella

Given the investment horizon of 90 days SPS Commerce is expected to under-perform the Ambarella. But the stock apears to be less risky and, when comparing its historical volatility, SPS Commerce is 1.29 times less risky than Ambarella. The stock trades about -0.08 of its potential returns per unit of risk. The Ambarella is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,168  in Ambarella on September 18, 2025 and sell it today you would earn a total of  2,030  from holding Ambarella or generate 39.28% return on investment over 90 days.

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

SPS Commerce  vs.  Ambarella

SPS Commerce

Risk-Adjusted Performance

Weakest

Over the last 90 days SPS Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2026. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ambarella

Risk-Adjusted Performance

Weakest

Over the last 90 days Ambarella has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SPS Commerce and Ambarella

The main advantage of trading using opposite SPS Commerce and Ambarella positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPS Commerce position performs unexpectedly, Ambarella 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 Ambarella will offset losses from the drop in Ambarella's long position.

The idea behind SPS Commerce and Ambarella 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 Commodity Directory module to find actively traded commodities issued by global exchanges.