Correlation Between Petroleo Brasileiro and ENF Technology

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and ENF Technology 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 ENF Technology 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 ENF Technology Co, you can compare the effects of market volatilities on Petroleo Brasileiro and ENF Technology 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 ENF Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and ENF Technology.

Diversification Opportunities for Petroleo Brasileiro and ENF Technology

0.66

Correlation Coefficient

Petroleo Brasileiro  ENF Technology

Poor diversification

The 3 months correlation between Petroleo and ENF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and ENF Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENF Technology 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 ENF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENF Technology has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and ENF Technology go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and ENF Technology

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.54 times more return on investment than ENF Technology. However, Petroleo Brasileiro Petrobras is 1.84 times less risky than ENF Technology. It trades about 0.01 of its potential returns per unit of risk. ENF Technology Co is currently generating about -0.04 per unit of risk. If you would invest  1,276  in Petroleo Brasileiro Petrobras on September 20, 2024 and sell it today you would earn a total of  19.00  from holding Petroleo Brasileiro Petrobras or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.81%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  ENF Technology Co

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

ENF Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENF Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Petroleo Brasileiro and ENF Technology

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

The idea behind Petroleo Brasileiro Petrobras and ENF Technology Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.