Correlation Between Petroleo Brasileiro and ALTAIR RES

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

Diversification Opportunities for Petroleo Brasileiro and ALTAIR RES

0.0

Correlation Coefficient

Petroleo Brasileiro  ALTAIR RES

Pay attention - limited upside

The 3 months correlation between Petroleo and ALTAIR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and ALTAIR RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTAIR RES INC 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 ALTAIR RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTAIR RES INC has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and ALTAIR RES go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and ALTAIR RES

If you would invest  1,247  in Petroleo Brasileiro Petrobras on December 22, 2024 and sell it today you would earn a total of  169.00  from holding Petroleo Brasileiro Petrobras or generate 13.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  ALTAIR RES INC

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro reported solid returns over the last few months and may actually be approaching a breakup point.

ALTAIR RES INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALTAIR RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALTAIR RES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Petroleo Brasileiro and ALTAIR RES

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

The idea behind Petroleo Brasileiro Petrobras and ALTAIR RES INC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.