Correlation Between Petroleo Brasileiro and Lucero Energy

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

Diversification Opportunities for Petroleo Brasileiro and Lucero Energy

0.53

Correlation Coefficient

Petroleo Brasileiro  Lucero Energy

Very weak diversification

The 3 months correlation between Petroleo and Lucero is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Lucero Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucero Energy Corp 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 Lucero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucero Energy Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Lucero Energy go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Lucero Energy

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Lucero Energy. In addition to that, Petroleo Brasileiro is 1.23 times more volatile than Lucero Energy Corp. It trades about -0.22 of its total potential returns per unit of risk. Lucero Energy Corp is currently generating about -0.06 per unit of volatility. If you would invest  44.00  in Lucero Energy Corp on December 4, 2024 and sell it today you would lose (1.00) from holding Lucero Energy Corp or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Lucero Energy Corp

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.

Lucero Energy Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lucero Energy Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Lucero Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Petroleo Brasileiro and Lucero Energy

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

The idea behind Petroleo Brasileiro Petrobras and Lucero Energy Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.