Correlation Between Petroleo Brasileiro and Unique Mining

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

Diversification Opportunities for Petroleo Brasileiro and Unique Mining

-0.15

Correlation Coefficient

Petroleo Brasileiro  Unique Mining

Good diversification

The 3 months correlation between Petroleo and Unique is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Unique Mining Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unique Mining Services 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 Unique Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unique Mining Services has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Unique Mining go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Unique Mining

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 13.43 times less return on investment than Unique Mining. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 23.18 times less risky than Unique Mining. It trades about 0.07 of its potential returns per unit of risk. Unique Mining Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  159.00  in Unique Mining Services on September 27, 2024 and sell it today you would lose (120.00) from holding Unique Mining Services or give up 75.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.65%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Unique Mining Services

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.

Unique Mining Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unique Mining Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Petroleo Brasileiro and Unique Mining

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

The idea behind Petroleo Brasileiro Petrobras and Unique Mining Services 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.