Correlation Between Petroleo Brasileiro and Ayen Enerji

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

Diversification Opportunities for Petroleo Brasileiro and Ayen Enerji

-0.04

Correlation Coefficient

Petroleo Brasileiro  Ayen Enerji

Good diversification

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

Pair Corralation between Petroleo Brasileiro and Ayen Enerji

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Ayen Enerji. In addition to that, Petroleo Brasileiro is 1.08 times more volatile than Ayen Enerji AS. It trades about -0.24 of its total potential returns per unit of risk. Ayen Enerji AS is currently generating about -0.1 per unit of volatility. If you would invest  3,059  in Ayen Enerji AS on September 23, 2024 and sell it today you would lose (127.00) from holding Ayen Enerji AS or give up 4.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Ayen Enerji AS

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 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.

Ayen Enerji AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ayen Enerji AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ayen Enerji is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Petroleo Brasileiro and Ayen Enerji

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

The idea behind Petroleo Brasileiro Petrobras and Ayen Enerji AS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.