Correlation Between Petroleo Brasileiro and SVENSKA CELLULO

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

Diversification Opportunities for Petroleo Brasileiro and SVENSKA CELLULO

0.68

Correlation Coefficient

Petroleo Brasileiro  SVENSKA CELLULO

Poor diversification

The 3 months correlation between Petroleo and SVENSKA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and SVENSKA CELLULO go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and SVENSKA CELLULO

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the SVENSKA CELLULO. In addition to that, Petroleo Brasileiro is 1.64 times more volatile than SVENSKA CELLULO B . It trades about -0.22 of its total potential returns per unit of risk. SVENSKA CELLULO B is currently generating about -0.25 per unit of volatility. If you would invest  1,255  in SVENSKA CELLULO B on September 24, 2024 and sell it today you would lose (77.00) from holding SVENSKA CELLULO B or give up 6.14% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  SVENSKA CELLULO B

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.

SVENSKA CELLULO B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVENSKA CELLULO B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Petroleo Brasileiro and SVENSKA CELLULO

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

The idea behind Petroleo Brasileiro Petrobras and SVENSKA CELLULO B 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..