Correlation Between Petroleo Brasileiro and Carlsberg A/S

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

Diversification Opportunities for Petroleo Brasileiro and Carlsberg A/S

-0.34

Correlation Coefficient

Petroleo Brasileiro  Carlsberg A/S

Very good diversification

The 3 months correlation between Petroleo and Carlsberg is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg A/S 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 Carlsberg A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg A/S has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Carlsberg A/S go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Carlsberg A/S

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.12 times more return on investment than Carlsberg A/S. However, Petroleo Brasileiro is 1.12 times more volatile than Carlsberg AS. It trades about 0.18 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.03 per unit of risk. If you would invest  1,282  in Petroleo Brasileiro Petrobras on October 15, 2024 and sell it today you would earn a total of  70.00  from holding Petroleo Brasileiro Petrobras or generate 5.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Carlsberg AS

Petroleo Brasileiro

Risk-Adjusted Performance

1 of 100

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.

Carlsberg A/S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Petroleo Brasileiro and Carlsberg A/S

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

The idea behind Petroleo Brasileiro Petrobras and Carlsberg 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.