Correlation Between Petroleo Brasileiro and Cia Brasileira

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

Diversification Opportunities for Petroleo Brasileiro and Cia Brasileira

-0.04

Correlation Coefficient

Petroleo Brasileiro  Cia Brasileira

Good diversification

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

Pair Corralation between Petroleo Brasileiro and Cia Brasileira

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.37 times more return on investment than Cia Brasileira. However, Petroleo Brasileiro Petrobras is 2.73 times less risky than Cia Brasileira. It trades about 0.46 of its potential returns per unit of risk. Cia Brasileira de is currently generating about 0.16 per unit of risk. If you would invest  1,247  in Petroleo Brasileiro Petrobras on October 22, 2024 and sell it today you would earn a total of  125.00  from holding Petroleo Brasileiro Petrobras or generate 10.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Cia Brasileira de

Petroleo Brasileiro

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cia Brasileira de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cia Brasileira de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Petroleo Brasileiro and Cia Brasileira

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

The idea behind Petroleo Brasileiro Petrobras and Cia Brasileira de 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..