Correlation Between Petroleo Brasileiro and Atlas Consolidated

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

Diversification Opportunities for Petroleo Brasileiro and Atlas Consolidated

-0.04

Correlation Coefficient

Petroleo Brasileiro  Atlas Consolidated

Good diversification

The 3 months correlation between Petroleo and Atlas is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Atlas Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Consolidated Mining 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 Atlas Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Consolidated Mining has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Atlas Consolidated go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Atlas Consolidated

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.84 times less return on investment than Atlas Consolidated. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 1.27 times less risky than Atlas Consolidated. It trades about 0.03 of its potential returns per unit of risk. Atlas Consolidated Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  320.00  in Atlas Consolidated Mining on December 2, 2024 and sell it today you would earn a total of  88.00  from holding Atlas Consolidated Mining or generate 27.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.68%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Atlas Consolidated Mining

Petroleo Brasileiro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Atlas Consolidated Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlas Consolidated Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Atlas Consolidated is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Petroleo Brasileiro and Atlas Consolidated

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

The idea behind Petroleo Brasileiro Petrobras and Atlas Consolidated Mining 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.