Correlation Between Petroleo Brasileiro and Super Energy

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

Diversification Opportunities for Petroleo Brasileiro and Super Energy

-0.13

Correlation Coefficient

Petroleo Brasileiro  Super Energy

Good diversification

The 3 months correlation between Petroleo and Super is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Super Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Energy 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 Super Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Super Energy go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Super Energy

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 27.35 times less return on investment than Super Energy. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 32.21 times less risky than Super Energy. It trades about 0.07 of its potential returns per unit of risk. Super Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Super Energy on October 22, 2024 and sell it today you would lose (43.00) from holding Super Energy or give up 66.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Super Energy

Petroleo Brasileiro

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Super Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Petroleo Brasileiro and Super Energy

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

The idea behind Petroleo Brasileiro Petrobras and Super Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.