Correlation Between Petroleo Brasileiro and Imagion Biosystems

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

Diversification Opportunities for Petroleo Brasileiro and Imagion Biosystems

-0.12

Correlation Coefficient

Petroleo Brasileiro  Imagion Biosystems

Good diversification

The 3 months correlation between Petroleo and Imagion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Imagion Biosystems Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imagion Biosystems 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 Imagion Biosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imagion Biosystems has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Imagion Biosystems go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Imagion Biosystems

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.13 times more return on investment than Imagion Biosystems. However, Petroleo Brasileiro Petrobras is 7.65 times less risky than Imagion Biosystems. It trades about -0.21 of its potential returns per unit of risk. Imagion Biosystems Limited is currently generating about -0.21 per unit of risk. If you would invest  1,422  in Petroleo Brasileiro Petrobras on December 5, 2024 and sell it today you would lose (126.00) from holding Petroleo Brasileiro Petrobras or give up 8.86% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Imagion Biosystems Limited

Petroleo Brasileiro

Risk-Adjusted Performance

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.

Imagion Biosystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imagion Biosystems Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Petroleo Brasileiro and Imagion Biosystems

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

The idea behind Petroleo Brasileiro Petrobras and Imagion Biosystems Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.