Correlation Between Petroleo Brasileiro and Asphere Innovations

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

Diversification Opportunities for Petroleo Brasileiro and Asphere Innovations

0.16

Correlation Coefficient

Petroleo Brasileiro  Asphere Innovations

Average diversification

The 3 months correlation between Petroleo and Asphere is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Asphere Innovations Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asphere Innovations 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 Asphere Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asphere Innovations has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Asphere Innovations go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Asphere Innovations

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.51 times more return on investment than Asphere Innovations. However, Petroleo Brasileiro Petrobras is 1.97 times less risky than Asphere Innovations. It trades about 0.04 of its potential returns per unit of risk. Asphere Innovations Public is currently generating about -0.01 per unit of risk. If you would invest  1,287  in Petroleo Brasileiro Petrobras on October 7, 2024 and sell it today you would earn a total of  15.00  from holding Petroleo Brasileiro Petrobras or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Asphere Innovations Public

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 unfluctuating 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.

Asphere Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asphere Innovations Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Petroleo Brasileiro and Asphere Innovations

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

The idea behind Petroleo Brasileiro Petrobras and Asphere Innovations Public 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.