Correlation Between Petroleo Brasileiro and Guerrilla

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

Diversification Opportunities for Petroleo Brasileiro and Guerrilla

0.13

Correlation Coefficient

Petroleo Brasileiro  Guerrilla

Average diversification

The 3 months correlation between Petroleo and Guerrilla is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF 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 Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Guerrilla go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Guerrilla

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Guerrilla. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 5.53 times less risky than Guerrilla. The stock trades about -0.24 of its potential returns per unit of risk. The Guerrilla RF is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Guerrilla RF on September 23, 2024 and sell it today you would earn a total of  68.00  from holding Guerrilla RF or generate 68.0% 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.  Guerrilla RF

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.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Petroleo Brasileiro and Guerrilla

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

The idea behind Petroleo Brasileiro Petrobras and Guerrilla RF 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.