Correlation Between Petroleo Brasileiro and SAXLUND GROUP

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

Diversification Opportunities for Petroleo Brasileiro and SAXLUND GROUP

0.35

Correlation Coefficient

Petroleo Brasileiro  SAXLUND GROUP

Weak diversification

The 3 months correlation between Petroleo and SAXLUND is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and SAXLUND GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAXLUND GROUP AB 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 SAXLUND GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAXLUND GROUP AB has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and SAXLUND GROUP go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and SAXLUND GROUP

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 2198.26 times less return on investment than SAXLUND GROUP. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 99.09 times less risky than SAXLUND GROUP. It trades about 0.01 of its potential returns per unit of risk. SAXLUND GROUP AB is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  550.00  in SAXLUND GROUP AB on October 1, 2024 and sell it today you would lose (530.00) from holding SAXLUND GROUP AB or give up 96.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.31%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  SAXLUND GROUP AB

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.

SAXLUND GROUP AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAXLUND GROUP AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SAXLUND GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and SAXLUND GROUP

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

The idea behind Petroleo Brasileiro Petrobras and SAXLUND GROUP AB 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.