Correlation Between Petroleo Brasileiro and 476810

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and 476810 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 476810 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 476810, you can compare the effects of market volatilities on Petroleo Brasileiro and 476810 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 476810. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and 476810.

Diversification Opportunities for Petroleo Brasileiro and 476810

-0.36

Correlation Coefficient

Petroleo Brasileiro  476810

Very good diversification

The 3 months correlation between Petroleo and 476810 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and 476810 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 476810 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 476810. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 476810 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and 476810 go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and 476810

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 37.73 times more return on investment than 476810. However, Petroleo Brasileiro is 37.73 times more volatile than 476810. It trades about 0.08 of its potential returns per unit of risk. 476810 is currently generating about 0.34 per unit of risk. If you would invest  642.00  in Petroleo Brasileiro Petrobras on September 24, 2024 and sell it today you would earn a total of  642.50  from holding Petroleo Brasileiro Petrobras or generate 100.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.36%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  476810

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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

476810

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 476810 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 476810 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 476810

The main advantage of trading using opposite Petroleo Brasileiro and 476810 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, 476810 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 476810 will offset losses from the drop in 476810's long position.

The idea behind Petroleo Brasileiro Petrobras and 476810 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.