Correlation Between Petroleo Brasileiro and SIM Technology

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

Diversification Opportunities for Petroleo Brasileiro and SIM Technology

0.46

Correlation Coefficient

Petroleo Brasileiro  SIM Technology

Very weak diversification

The 3 months correlation between Petroleo and SIM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and SIM Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIM Technology 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 SIM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIM Technology Group has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and SIM Technology go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and SIM Technology

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the SIM Technology. In addition to that, Petroleo Brasileiro is 1.89 times more volatile than SIM Technology Group. It trades about -0.24 of its total potential returns per unit of risk. SIM Technology Group is currently generating about -0.37 per unit of volatility. If you would invest  327.00  in SIM Technology Group on September 24, 2024 and sell it today you would lose (24.00) from holding SIM Technology Group or give up 7.34% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  SIM Technology 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 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.

SIM Technology Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIM Technology Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SIM Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and SIM Technology

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

The idea behind Petroleo Brasileiro Petrobras and SIM Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.