Correlation Between Petroleo Brasileiro and Kristal Kola

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

Diversification Opportunities for Petroleo Brasileiro and Kristal Kola

0.3

Correlation Coefficient

Petroleo Brasileiro  Kristal Kola

Weak diversification

The 3 months correlation between Petroleo and Kristal is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Kristal Kola ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kristal Kola ve 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 Kristal Kola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kristal Kola ve has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Kristal Kola go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Kristal Kola

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.51 times more return on investment than Kristal Kola. However, Petroleo Brasileiro Petrobras is 1.95 times less risky than Kristal Kola. It trades about 0.07 of its potential returns per unit of risk. Kristal Kola ve is currently generating about 0.0 per unit of risk. If you would invest  740.00  in Petroleo Brasileiro Petrobras on October 10, 2024 and sell it today you would earn a total of  609.00  from holding Petroleo Brasileiro Petrobras or generate 82.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Kristal Kola ve

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.

Kristal Kola ve

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kristal Kola ve are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Kristal Kola is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Petroleo Brasileiro and Kristal Kola

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

The idea behind Petroleo Brasileiro Petrobras and Kristal Kola ve 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..