Correlation Between Petroleo Brasileiro and NOVHOL

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and NOVHOL 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 NOVHOL 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 NOVHOL 6625 15 APR 29, you can compare the effects of market volatilities on Petroleo Brasileiro and NOVHOL 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 NOVHOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and NOVHOL.

Diversification Opportunities for Petroleo Brasileiro and NOVHOL

0.39

Correlation Coefficient

Petroleo Brasileiro  NOVHOL

Weak diversification

The 3 months correlation between Petroleo and NOVHOL is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and NOVHOL 6625 15 APR 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVHOL 6625 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 NOVHOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVHOL 6625 15 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and NOVHOL go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and NOVHOL

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the NOVHOL. In addition to that, Petroleo Brasileiro is 2.13 times more volatile than NOVHOL 6625 15 APR 29. It trades about -0.08 of its total potential returns per unit of risk. NOVHOL 6625 15 APR 29 is currently generating about -0.16 per unit of volatility. If you would invest  10,100  in NOVHOL 6625 15 APR 29 on October 1, 2024 and sell it today you would lose (675.00) from holding NOVHOL 6625 15 APR 29 or give up 6.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  NOVHOL 6625 15 APR 29

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.

NOVHOL 6625 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVHOL 6625 15 APR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NOVHOL 6625 15 APR 29 investors.

Pair Trading with Petroleo Brasileiro and NOVHOL

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

The idea behind Petroleo Brasileiro Petrobras and NOVHOL 6625 15 APR 29 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.