Correlation Between Petroleo Brasileiro and 78409VAM6

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and 78409VAM6 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 78409VAM6 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 SP GLOBAL INC, you can compare the effects of market volatilities on Petroleo Brasileiro and 78409VAM6 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 78409VAM6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and 78409VAM6.

Diversification Opportunities for Petroleo Brasileiro and 78409VAM6

0.41

Correlation Coefficient

Petroleo Brasileiro  78409VAM6

Very weak diversification

The 3 months correlation between Petroleo and 78409VAM6 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and SP GLOBAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP GLOBAL INC 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 78409VAM6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP GLOBAL INC has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and 78409VAM6 go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and 78409VAM6

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the 78409VAM6. In addition to that, Petroleo Brasileiro is 16.22 times more volatile than SP GLOBAL INC. It trades about -0.22 of its total potential returns per unit of risk. SP GLOBAL INC is currently generating about -0.24 per unit of volatility. If you would invest  9,682  in SP GLOBAL INC on September 25, 2024 and sell it today you would lose (54.00) from holding SP GLOBAL INC or give up 0.56% 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.  SP GLOBAL INC

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 conflicting 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.

SP GLOBAL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP GLOBAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 78409VAM6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and 78409VAM6

The main advantage of trading using opposite Petroleo Brasileiro and 78409VAM6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, 78409VAM6 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 78409VAM6 will offset losses from the drop in 78409VAM6's long position.

The idea behind Petroleo Brasileiro Petrobras and SP GLOBAL INC 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.