Correlation Between Petroleo Brasileiro and Blue Moon

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

Diversification Opportunities for Petroleo Brasileiro and Blue Moon

-0.26

Correlation Coefficient

Petroleo Brasileiro  Blue Moon

Very good diversification

The 3 months correlation between Petroleo and Blue is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Blue Moon Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Zinc 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 Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Zinc has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Blue Moon go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Blue Moon

If you would invest  36.00  in Blue Moon Zinc on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Blue Moon Zinc or generate 0.0% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Blue Moon Zinc

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.

Blue Moon Zinc

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with Petroleo Brasileiro and Blue Moon

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

The idea behind Petroleo Brasileiro Petrobras and Blue Moon Zinc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.