Correlation Between Petroleo Brasileiro and Cronos Immo

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

Diversification Opportunities for Petroleo Brasileiro and Cronos Immo

-0.33

Correlation Coefficient

Petroleo Brasileiro  Cronos Immo

Very good diversification

The 3 months correlation between Petroleo and Cronos is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Cronos Immo Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Immo Fund 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 Cronos Immo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Immo Fund has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Cronos Immo go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Cronos Immo

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Cronos Immo. In addition to that, Petroleo Brasileiro is 2.29 times more volatile than Cronos Immo Fund. It trades about -0.08 of its total potential returns per unit of risk. Cronos Immo Fund is currently generating about 0.19 per unit of volatility. If you would invest  11,450  in Cronos Immo Fund on September 28, 2024 and sell it today you would earn a total of  1,050  from holding Cronos Immo Fund or generate 9.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Cronos Immo Fund

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.

Cronos Immo Fund

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cronos Immo Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish technical and fundamental indicators, Cronos Immo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Cronos Immo

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

The idea behind Petroleo Brasileiro Petrobras and Cronos Immo Fund 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.