Correlation Between Petroleo Brasileiro and CS Real

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

Diversification Opportunities for Petroleo Brasileiro and CS Real

-0.3

Correlation Coefficient

Petroleo Brasileiro  CS Real

Very good diversification

The 3 months correlation between Petroleo and CSLP is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate 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 CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and CS Real go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and CS Real

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the CS Real. In addition to that, Petroleo Brasileiro is 2.02 times more volatile than CS Real Estate. It trades about -0.19 of its total potential returns per unit of risk. CS Real Estate is currently generating about 0.27 per unit of volatility. If you would invest  14,800  in CS Real Estate on September 27, 2024 and sell it today you would earn a total of  750.00  from holding CS Real Estate or generate 5.07% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  CS Real Estate

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.

CS Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, CS Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Petroleo Brasileiro and CS Real

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

The idea behind Petroleo Brasileiro Petrobras and CS Real Estate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.