Correlation Between Petroleo Brasileiro and Ab Sustainable

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

Diversification Opportunities for Petroleo Brasileiro and Ab Sustainable

0.39

Correlation Coefficient

Petroleo Brasileiro  Ab Sustainable

Weak diversification

The 3 months correlation between Petroleo and ATEYX is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Ab Sustainable Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Global 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 Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Global has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Ab Sustainable go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Ab Sustainable

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 2.14 times less return on investment than Ab Sustainable. In addition to that, Petroleo Brasileiro is 2.0 times more volatile than Ab Sustainable Global. It trades about 0.01 of its total potential returns per unit of risk. Ab Sustainable Global is currently generating about 0.05 per unit of volatility. If you would invest  14,158  in Ab Sustainable Global on October 1, 2024 and sell it today you would earn a total of  1,709  from holding Ab Sustainable Global or generate 12.07% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Ab Sustainable Global

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.

Ab Sustainable Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Sustainable Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Petroleo Brasileiro and Ab Sustainable

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

The idea behind Petroleo Brasileiro Petrobras and Ab Sustainable Global 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.