Correlation Between Petroleo Brasileiro and TOLEDO

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and TOLEDO 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 TOLEDO 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 TOLEDO HOSP 5325, you can compare the effects of market volatilities on Petroleo Brasileiro and TOLEDO 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 TOLEDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and TOLEDO.

Diversification Opportunities for Petroleo Brasileiro and TOLEDO

-0.08

Correlation Coefficient

Petroleo Brasileiro  TOLEDO

Good diversification

The 3 months correlation between Petroleo and TOLEDO is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and TOLEDO HOSP 5325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOLEDO HOSP 5325 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 TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOLEDO HOSP 5325 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and TOLEDO go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and TOLEDO

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 57.06 times less return on investment than TOLEDO. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 45.54 times less risky than TOLEDO. It trades about 0.07 of its potential returns per unit of risk. TOLEDO HOSP 5325 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,194  in TOLEDO HOSP 5325 on October 12, 2024 and sell it today you would lose (484.00) from holding TOLEDO HOSP 5325 or give up 5.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.91%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  TOLEDO HOSP 5325

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.

TOLEDO HOSP 5325

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOLEDO HOSP 5325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for TOLEDO HOSP 5325 investors.

Pair Trading with Petroleo Brasileiro and TOLEDO

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

The idea behind Petroleo Brasileiro Petrobras and TOLEDO HOSP 5325 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.