Correlation Between Grupo Carso and Petrleo Brasileiro

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Can any of the company-specific risk be diversified away by investing in both Grupo Carso and Petrleo 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 Grupo Carso and Petrleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Carso SAB and Petrleo Brasileiro SA, you can compare the effects of market volatilities on Grupo Carso and Petrleo 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 Grupo Carso with a short position of Petrleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and Petrleo Brasileiro.

Diversification Opportunities for Grupo Carso and Petrleo Brasileiro

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Grupo and Petrleo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleo Brasileiro and Grupo Carso 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 Grupo Carso SAB are associated (or correlated) with Petrleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrleo Brasileiro has no effect on the direction of Grupo Carso i.e., Grupo Carso and Petrleo Brasileiro go up and down completely randomly.

Pair Corralation between Grupo Carso and Petrleo Brasileiro

Assuming the 90 days trading horizon Grupo Carso is expected to generate 7.31 times less return on investment than Petrleo Brasileiro. In addition to that, Grupo Carso is 1.31 times more volatile than Petrleo Brasileiro SA. It trades about 0.0 of its total potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about 0.02 per unit of volatility. If you would invest  27,004  in Petrleo Brasileiro SA on September 17, 2024 and sell it today you would earn a total of  386.00  from holding Petrleo Brasileiro SA or generate 1.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Carso SAB  vs.  Petrleo Brasileiro SA

 Performance 
       Timeline  
Grupo Carso SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Petrleo Brasileiro 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Petrleo Brasileiro SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Petrleo Brasileiro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Carso and Petrleo Brasileiro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Carso and Petrleo Brasileiro

The main advantage of trading using opposite Grupo Carso and Petrleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso position performs unexpectedly, Petrleo 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 Petrleo Brasileiro will offset losses from the drop in Petrleo Brasileiro's long position.
The idea behind Grupo Carso SAB and Petrleo Brasileiro SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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