Correlation Between Petroleo Brasileiro and Brouwerij Handelsmaatschap

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

Diversification Opportunities for Petroleo Brasileiro and Brouwerij Handelsmaatschap

-0.33

Correlation Coefficient

Petroleo Brasileiro  Brouwerij Handelsmaatschap

Very good diversification

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

Pair Corralation between Petroleo Brasileiro and Brouwerij Handelsmaatschap

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Brouwerij Handelsmaatschap. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.75 times less risky than Brouwerij Handelsmaatschap. The stock trades about -0.06 of its potential returns per unit of risk. The Brouwerij Handelsmaatschappij NV is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  166,000  in Brouwerij Handelsmaatschappij NV on September 17, 2024 and sell it today you would lose (10,000) from holding Brouwerij Handelsmaatschappij NV or give up 6.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Brouwerij Handelsmaatschappij

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Brouwerij Handelsmaatschap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brouwerij Handelsmaatschappij NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brouwerij Handelsmaatschap is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Petroleo Brasileiro and Brouwerij Handelsmaatschap

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

The idea behind Petroleo Brasileiro Petrobras and Brouwerij Handelsmaatschappij NV 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.