Correlation Between Petroleo Brasileiro and Valbiotis SAS

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

Diversification Opportunities for Petroleo Brasileiro and Valbiotis SAS

-0.03

Correlation Coefficient

Petroleo Brasileiro  Valbiotis SAS

Good diversification

The 3 months correlation between Petroleo and Valbiotis is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Valbiotis SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valbiotis SAS 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 Valbiotis SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valbiotis SAS has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Valbiotis SAS go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Valbiotis SAS

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Valbiotis SAS. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.3 times less risky than Valbiotis SAS. The stock trades about -0.07 of its potential returns per unit of risk. The Valbiotis SAS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Valbiotis SAS on September 26, 2024 and sell it today you would earn a total of  6.00  from holding Valbiotis SAS or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Valbiotis SAS

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 conflicting 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.

Valbiotis SAS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valbiotis SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Valbiotis SAS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Valbiotis SAS

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

The idea behind Petroleo Brasileiro Petrobras and Valbiotis SAS 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.