Correlation Between Petroleo Brasileiro and 191216DK3

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and 191216DK3 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 191216DK3 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 COCA COLA CO, you can compare the effects of market volatilities on Petroleo Brasileiro and 191216DK3 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 191216DK3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and 191216DK3.

Diversification Opportunities for Petroleo Brasileiro and 191216DK3

0.64

Correlation Coefficient

Petroleo Brasileiro  191216DK3

Poor diversification

The 3 months correlation between Petroleo and 191216DK3 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216DK3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and 191216DK3 go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and 191216DK3

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the 191216DK3. In addition to that, Petroleo Brasileiro is 2.29 times more volatile than COCA COLA CO. It trades about -0.22 of its total potential returns per unit of risk. COCA COLA CO is currently generating about -0.2 per unit of volatility. If you would invest  8,635  in COCA COLA CO on September 24, 2024 and sell it today you would lose (269.00) from holding COCA COLA CO or give up 3.12% of portfolio value over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  COCA COLA CO

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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216DK3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and 191216DK3

The main advantage of trading using opposite Petroleo Brasileiro and 191216DK3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, 191216DK3 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 191216DK3 will offset losses from the drop in 191216DK3's long position.

The idea behind Petroleo Brasileiro Petrobras and COCA COLA CO 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.