Correlation Between Petroleo Brasileiro and UBS CH

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

Diversification Opportunities for Petroleo Brasileiro and UBS CH

0.02

Correlation Coefficient

Petroleo Brasileiro  UBS CH

Significant diversification

The 3 months correlation between Petroleo and UBS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and UBS CH Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS CH Property 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 UBS CH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS CH Property has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and UBS CH go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and UBS CH

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the UBS CH. In addition to that, Petroleo Brasileiro is 1.31 times more volatile than UBS CH Property. It trades about -0.14 of its total potential returns per unit of risk. UBS CH Property is currently generating about 0.1 per unit of volatility. If you would invest  1,335  in UBS CH Property on September 28, 2024 and sell it today you would earn a total of  35.00  from holding UBS CH Property or generate 2.62% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  UBS CH Property

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

UBS CH Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS CH Property has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, UBS CH 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 UBS CH

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

The idea behind Petroleo Brasileiro Petrobras and UBS CH Property 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.