Correlation Between Petroleo Brasileiro and Aim Investment

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

Diversification Opportunities for Petroleo Brasileiro and Aim Investment

0.79

Correlation Coefficient

Petroleo Brasileiro  Aim Investment

Poor diversification

The 3 months correlation between Petroleo and Aim is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Aim Investment Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Funds 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 Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Funds has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Aim Investment go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Aim Investment

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 3.18 times less return on investment than Aim Investment. In addition to that, Petroleo Brasileiro is 4.27 times more volatile than Aim Investment Funds. It trades about 0.01 of its total potential returns per unit of risk. Aim Investment Funds is currently generating about 0.11 per unit of volatility. If you would invest  430.00  in Aim Investment Funds on December 3, 2024 and sell it today you would earn a total of  11.00  from holding Aim Investment Funds or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Aim Investment Funds

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.

Aim Investment Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Investment Funds are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aim Investment 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 Aim Investment

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

The idea behind Petroleo Brasileiro Petrobras and Aim Investment Funds 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.