Correlation Between Petroleo Brasileiro and Credit Suisse

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

Diversification Opportunities for Petroleo Brasileiro and Credit Suisse

0.75

Correlation Coefficient

Petroleo Brasileiro  Credit Suisse

Poor diversification

The 3 months correlation between Petroleo and Credit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Credit Suisse Multialternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Multia 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 Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Multia has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Credit Suisse go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Credit Suisse

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Credit Suisse. In addition to that, Petroleo Brasileiro is 6.47 times more volatile than Credit Suisse Multialternative. It trades about -0.14 of its total potential returns per unit of risk. Credit Suisse Multialternative is currently generating about 0.06 per unit of volatility. If you would invest  830.00  in Credit Suisse Multialternative on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Credit Suisse Multialternative or generate 0.36% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Credit Suisse Multialternative

Petroleo Brasileiro

Risk-Adjusted Performance

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.

Credit Suisse Multia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Multialternative are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Credit Suisse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Credit Suisse

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

The idea behind Petroleo Brasileiro Petrobras and Credit Suisse Multialternative 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.