Correlation Between Petroleo Brasileiro and BHCCN

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and BHCCN 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 BHCCN 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 BHCCN 14 15 OCT 30, you can compare the effects of market volatilities on Petroleo Brasileiro and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and BHCCN.

Diversification Opportunities for Petroleo Brasileiro and BHCCN

-0.44

Correlation Coefficient

Petroleo Brasileiro  BHCCN

Very good diversification

The 3 months correlation between Petroleo and BHCCN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and BHCCN 14 15 OCT 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 14 15 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 14 15 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and BHCCN go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and BHCCN

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.86 times more return on investment than BHCCN. However, Petroleo Brasileiro Petrobras is 1.16 times less risky than BHCCN. It trades about 0.07 of its potential returns per unit of risk. BHCCN 14 15 OCT 30 is currently generating about 0.04 per unit of risk. If you would invest  765.00  in Petroleo Brasileiro Petrobras on October 12, 2024 and sell it today you would earn a total of  575.00  from holding Petroleo Brasileiro Petrobras or generate 75.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.71%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  BHCCN 14 15 OCT 30

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 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.

BHCCN 14 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 14 15 OCT 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BHCCN 14 15 OCT 30 investors.

Pair Trading with Petroleo Brasileiro and BHCCN

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

The idea behind Petroleo Brasileiro Petrobras and BHCCN 14 15 OCT 30 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.