Correlation Between Petroleo Brasileiro and Kent Gida

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

Diversification Opportunities for Petroleo Brasileiro and Kent Gida

-0.09

Correlation Coefficient

Petroleo Brasileiro  Kent Gida

Good diversification

The 3 months correlation between Petroleo and Kent is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Kent Gida Maddeleri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kent Gida Maddeleri 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 Kent Gida. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kent Gida Maddeleri has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Kent Gida go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Kent Gida

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 3.23 times less return on investment than Kent Gida. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 2.47 times less risky than Kent Gida. It trades about 0.07 of its potential returns per unit of risk. Kent Gida Maddeleri is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  21,240  in Kent Gida Maddeleri on October 7, 2024 and sell it today you would earn a total of  78,160  from holding Kent Gida Maddeleri or generate 367.98% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Kent Gida Maddeleri

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 latest unfluctuating performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Kent Gida Maddeleri

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kent Gida Maddeleri are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Kent Gida unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Kent Gida

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

The idea behind Petroleo Brasileiro Petrobras and Kent Gida Maddeleri 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.