Correlation Between Petroleo Brasileiro and INTNED

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and INTNED 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 INTNED 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 INTNED 4252 28 MAR 33, you can compare the effects of market volatilities on Petroleo Brasileiro and INTNED 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 INTNED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and INTNED.

Diversification Opportunities for Petroleo Brasileiro and INTNED

0.46

Correlation Coefficient

Petroleo Brasileiro  INTNED

Very weak diversification

The 3 months correlation between Petroleo and INTNED is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and INTNED 4252 28 MAR 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTNED 4252 28 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 INTNED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTNED 4252 28 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and INTNED go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and INTNED

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the INTNED. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.68 times less risky than INTNED. The stock trades about -0.06 of its potential returns per unit of risk. The INTNED 4252 28 MAR 33 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,370  in INTNED 4252 28 MAR 33 on September 19, 2024 and sell it today you would lose (298.00) from holding INTNED 4252 28 MAR 33 or give up 3.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  INTNED 4252 28 MAR 33

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.

INTNED 4252 28

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTNED 4252 28 MAR 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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 INTNED 4252 28 MAR 33 investors.

Pair Trading with Petroleo Brasileiro and INTNED

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

The idea behind Petroleo Brasileiro Petrobras and INTNED 4252 28 MAR 33 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.