Correlation Between Petroleo Brasileiro and RNI Negcios

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

Diversification Opportunities for Petroleo Brasileiro and RNI Negcios

0.41

Correlation Coefficient

Petroleo Brasileiro  RNI Negcios

Very weak diversification

The 3 months correlation between Petroleo and RNI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and RNI Negcios Imobilirios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RNI Negcios Imobilirios 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 RNI Negcios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RNI Negcios Imobilirios has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and RNI Negcios go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and RNI Negcios

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the RNI Negcios. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.93 times less risky than RNI Negcios. The stock trades about -0.2 of its potential returns per unit of risk. The RNI Negcios Imobilirios is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  225.00  in RNI Negcios Imobilirios on December 6, 2024 and sell it today you would earn a total of  24.00  from holding RNI Negcios Imobilirios or generate 10.67% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  RNI Negcios Imobilirios

Petroleo Brasileiro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

RNI Negcios Imobilirios

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RNI Negcios Imobilirios are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, RNI Negcios may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Petroleo Brasileiro and RNI Negcios

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

The idea behind Petroleo Brasileiro Petrobras and RNI Negcios Imobilirios 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.