Correlation Between Petroleo Brasileiro and Virtus Kar

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

Diversification Opportunities for Petroleo Brasileiro and Virtus Kar

-0.17

Correlation Coefficient

Petroleo Brasileiro  Virtus Kar

Good diversification

The 3 months correlation between Petroleo and Virtus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Virtus Kar Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Capital 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Capital has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Virtus Kar go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Virtus Kar

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Virtus Kar. In addition to that, Petroleo Brasileiro is 1.98 times more volatile than Virtus Kar Capital. It trades about -0.22 of its total potential returns per unit of risk. Virtus Kar Capital is currently generating about -0.26 per unit of volatility. If you would invest  2,084  in Virtus Kar Capital on December 5, 2024 and sell it today you would lose (110.00) from holding Virtus Kar Capital or give up 5.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Virtus Kar Capital

Petroleo Brasileiro

Risk-Adjusted Performance

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.

Virtus Kar Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Petroleo Brasileiro and Virtus Kar

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

The idea behind Petroleo Brasileiro Petrobras and Virtus Kar Capital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.