Correlation Between Petroleo Brasileiro and ENELIM

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and ENELIM 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 ENELIM 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 ENELIM 71 14 OCT 27, you can compare the effects of market volatilities on Petroleo Brasileiro and ENELIM 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 ENELIM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and ENELIM.

Diversification Opportunities for Petroleo Brasileiro and ENELIM

-0.21

Correlation Coefficient

Petroleo Brasileiro  ENELIM

Very good diversification

The 3 months correlation between Petroleo and ENELIM is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and ENELIM 71 14 OCT 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENELIM 71 14 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 ENELIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENELIM 71 14 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and ENELIM go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and ENELIM

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the ENELIM. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.71 times less risky than ENELIM. The stock trades about -0.19 of its potential returns per unit of risk. The ENELIM 71 14 OCT 27 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,587  in ENELIM 71 14 OCT 27 on September 27, 2024 and sell it today you would earn a total of  38.00  from holding ENELIM 71 14 OCT 27 or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.82%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  ENELIM 71 14 OCT 27

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.

ENELIM 71 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENELIM 71 14 OCT 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENELIM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and ENELIM

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

The idea behind Petroleo Brasileiro Petrobras and ENELIM 71 14 OCT 27 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.