Correlation Between Petroleo Brasileiro and GBT Technologies

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

Diversification Opportunities for Petroleo Brasileiro and GBT Technologies

-0.43

Correlation Coefficient

Petroleo Brasileiro  GBT Technologies

Very good diversification

The 3 months correlation between Petroleo and GBT is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and GBT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBT Technologies 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 GBT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBT Technologies has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and GBT Technologies go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and GBT Technologies

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 230.06 times less return on investment than GBT Technologies. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 133.41 times less risky than GBT Technologies. It trades about 0.12 of its potential returns per unit of risk. GBT Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.02  in GBT Technologies on December 20, 2024 and sell it today you would lose (0.01) from holding GBT Technologies or give up 50.0% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  GBT Technologies

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GBT Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GBT Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, GBT Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and GBT Technologies

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

The idea behind Petroleo Brasileiro Petrobras and GBT Technologies 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.