Correlation Between Petroleo Brasileiro and KIM KINDEX

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

Diversification Opportunities for Petroleo Brasileiro and KIM KINDEX

0.0

Correlation Coefficient

Petroleo Brasileiro  KIM KINDEX

Pay attention - limited upside

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

Pair Corralation between Petroleo Brasileiro and KIM KINDEX

If you would invest  1,303  in Petroleo Brasileiro Petrobras on October 14, 2024 and sell it today you would earn a total of  45.00  from holding Petroleo Brasileiro Petrobras or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  KIM KINDEX Smart

Petroleo Brasileiro

Risk-Adjusted Performance

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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.

KIM KINDEX Smart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIM KINDEX Smart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KIM KINDEX 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 KIM KINDEX

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

The idea behind Petroleo Brasileiro Petrobras and KIM KINDEX Smart 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.