Correlation Between Petroleo Brasileiro and Circuit Fabology

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

Diversification Opportunities for Petroleo Brasileiro and Circuit Fabology

-0.28

Correlation Coefficient

Petroleo Brasileiro  Circuit Fabology

Very good diversification

The 3 months correlation between Petroleo and Circuit is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Circuit Fabology Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circuit Fabology Mic 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 Circuit Fabology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circuit Fabology Mic has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Circuit Fabology go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Circuit Fabology

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Circuit Fabology. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.89 times less risky than Circuit Fabology. The stock trades about -0.01 of its potential returns per unit of risk. The Circuit Fabology Microelectronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,872  in Circuit Fabology Microelectronics on October 2, 2024 and sell it today you would earn a total of  900.00  from holding Circuit Fabology Microelectronics or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.2%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Circuit Fabology Microelectron

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.

Circuit Fabology Mic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Circuit Fabology Microelectronics 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 Circuit Fabology

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

The idea behind Petroleo Brasileiro Petrobras and Circuit Fabology Microelectronics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.