Correlation Between Petroleo Brasileiro and Coronation Top

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

By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Coronation Top 20, you can compare the effects of market volatilities on Petroleo Brasileiro and Coronation Top 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 Petroleo Brasileiro with a short position of Coronation Top. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Coronation Top.

Diversification Opportunities for Petroleo Brasileiro and Coronation Top

0.1

Correlation Coefficient

Petroleo Brasileiro  Coronation Top

Average diversification

The 3 months correlation between Petroleo and Coronation is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Coronation Top 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Top 20 and Petroleo Brasileiro 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 Petroleo Brasileiro Petrobras are associated (or correlated) with Coronation Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Top 20 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Coronation Top go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Coronation Top

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Coronation Top. In addition to that, Petroleo Brasileiro is 1.94 times more volatile than Coronation Top 20. It trades about -0.04 of its total potential returns per unit of risk. Coronation Top 20 is currently generating about 0.03 per unit of volatility. If you would invest  21,818  in Coronation Top 20 on September 17, 2024 and sell it today you would earn a total of  254.00  from holding Coronation Top 20 or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Coronation Top 20

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Very 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.

Coronation Top 20

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Top 20 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Coronation Top is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Coronation Top

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

The idea behind Petroleo Brasileiro Petrobras and Coronation Top 20 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.