Correlation Between Aquagold International and Petroleo Brasileiro

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

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

Diversification Opportunities for Aquagold International and Petroleo Brasileiro

0.0

Correlation Coefficient

Aquagold International  Petroleo Brasileiro

Pay attention - limited upside

The 3 months correlation between Aquagold and Petroleo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Aquagold International 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 Aquagold International are associated (or correlated) with Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Aquagold International i.e., Aquagold International and Petroleo Brasileiro go up and down completely randomly.

Pair Corralation between Aquagold International and Petroleo Brasileiro

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Petroleo Brasileiro. In addition to that, Aquagold International is 2.95 times more volatile than Petroleo Brasileiro Petrobras. It trades about -0.03 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.02 per unit of volatility. If you would invest  1,362  in Petroleo Brasileiro Petrobras on September 13, 2024 and sell it today you would earn a total of  98.00  from holding Petroleo Brasileiro Petrobras or generate 7.2% return on investment over 90 days.

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

Aquagold International  vs.  Petroleo Brasileiro Petrobras

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aquagold International and Petroleo Brasileiro

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

The idea behind Aquagold International and Petroleo Brasileiro Petrobras 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.