Correlation Between Petroleo Brasileiro and 479080

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and 479080 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 479080 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 479080, you can compare the effects of market volatilities on Petroleo Brasileiro and 479080 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 479080. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and 479080.

Diversification Opportunities for Petroleo Brasileiro and 479080

0.15

Correlation Coefficient

Petroleo Brasileiro  479080

Average diversification

The 3 months correlation between Petroleo and 479080 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and 479080 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 479080 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 479080. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 479080 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and 479080 go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and 479080

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 154.95 times more return on investment than 479080. However, Petroleo Brasileiro is 154.95 times more volatile than 479080. It trades about 0.06 of its potential returns per unit of risk. 479080 is currently generating about 1.39 per unit of risk. If you would invest  1,324  in Petroleo Brasileiro Petrobras on October 13, 2024 and sell it today you would earn a total of  24.00  from holding Petroleo Brasileiro Petrobras or generate 1.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  479080

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.

479080

Risk-Adjusted Performance

96 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in 479080 are ranked lower than 96 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 479080 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 479080

The main advantage of trading using opposite Petroleo Brasileiro and 479080 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, 479080 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 479080 will offset losses from the drop in 479080's long position.

The idea behind Petroleo Brasileiro Petrobras and 479080 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.