Correlation Between Petroleo Brasileiro and Monex SAB

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

Diversification Opportunities for Petroleo Brasileiro and Monex SAB

0.0

Correlation Coefficient

Petroleo Brasileiro  Monex SAB

Pay attention - limited upside

The 3 months correlation between Petroleo and Monex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Monex SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monex SAB de 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 Monex SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monex SAB de has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Monex SAB go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Monex SAB

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 11.24 times more return on investment than Monex SAB. However, Petroleo Brasileiro is 11.24 times more volatile than Monex SAB de. It trades about 0.08 of its potential returns per unit of risk. Monex SAB de is currently generating about -0.04 per unit of risk. If you would invest  642.00  in Petroleo Brasileiro Petrobras on September 24, 2024 and sell it today you would earn a total of  642.50  from holding Petroleo Brasileiro Petrobras or generate 100.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Monex SAB de

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 unsteady 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.

Monex SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monex SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Monex SAB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Monex SAB

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

The idea behind Petroleo Brasileiro Petrobras and Monex SAB de 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.