Correlation Between Athabasca Oil and Petroleo Brasileiro

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

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

Diversification Opportunities for Athabasca Oil and Petroleo Brasileiro

0.19

Correlation Coefficient

Athabasca Oil  Petroleo Brasileiro

Average diversification

The 3 months correlation between Athabasca and Petroleo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Athabasca Oil Corp and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Athabasca Oil 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 Athabasca Oil Corp 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 Athabasca Oil i.e., Athabasca Oil and Petroleo Brasileiro go up and down completely randomly.

Pair Corralation between Athabasca Oil and Petroleo Brasileiro

Assuming the 90 days horizon Athabasca Oil is expected to generate 1.46 times less return on investment than Petroleo Brasileiro. In addition to that, Athabasca Oil is 1.48 times more volatile than Petroleo Brasileiro Petrobras. It trades about 0.06 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.12 per unit of volatility. If you would invest  1,275  in Petroleo Brasileiro Petrobras on December 30, 2024 and sell it today you would earn a total of  163.00  from holding Petroleo Brasileiro Petrobras or generate 12.78% return on investment over 90 days.

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

Athabasca Oil Corp  vs.  Petroleo Brasileiro Petrobras

Athabasca Oil Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Athabasca Oil Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Athabasca Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Petroleo Brasileiro reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Athabasca Oil and Petroleo Brasileiro

The main advantage of trading using opposite Athabasca Oil and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athabasca Oil 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 Athabasca Oil Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.