Correlation Between Petroleo Brasileiro and Sharc International

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

Diversification Opportunities for Petroleo Brasileiro and Sharc International

0.32

Correlation Coefficient

Petroleo Brasileiro  Sharc International

Weak diversification

The 3 months correlation between Petroleo and Sharc is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Sharc International Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharc International 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 Sharc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharc International has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Sharc International go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Sharc International

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.98 times less return on investment than Sharc International. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 3.69 times less risky than Sharc International. It trades about 0.01 of its potential returns per unit of risk. Sharc International Systems is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Sharc International Systems on September 14, 2024 and sell it today you would lose (6.65) from holding Sharc International Systems or give up 44.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.18%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Sharc International Systems

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.

Sharc International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sharc International Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Sharc International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Sharc International

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

The idea behind Petroleo Brasileiro Petrobras and Sharc International Systems 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.