Correlation Between Petroleo Brasileiro and PTT Synergy

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

Diversification Opportunities for Petroleo Brasileiro and PTT Synergy

0.09

Correlation Coefficient

Petroleo Brasileiro  PTT Synergy

Significant diversification

The 3 months correlation between Petroleo and PTT is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and PTT Synergy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Synergy Group 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 PTT Synergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Synergy Group has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and PTT Synergy go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and PTT Synergy

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the PTT Synergy. In addition to that, Petroleo Brasileiro is 1.08 times more volatile than PTT Synergy Group. It trades about -0.06 of its total potential returns per unit of risk. PTT Synergy Group is currently generating about 0.18 per unit of volatility. If you would invest  99.00  in PTT Synergy Group on September 19, 2024 and sell it today you would earn a total of  7.00  from holding PTT Synergy Group or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  PTT Synergy Group

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.

PTT Synergy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Synergy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PTT Synergy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Petroleo Brasileiro and PTT Synergy

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

The idea behind Petroleo Brasileiro Petrobras and PTT Synergy Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.