Correlation Between Petroleo Brasileiro and VALORA HLDG

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

Diversification Opportunities for Petroleo Brasileiro and VALORA HLDG

0.0

Correlation Coefficient

Petroleo Brasileiro  VALORA HLDG

Pay attention - limited upside

The 3 months correlation between Petroleo and VALORA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and VALORA HLDG OPEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VALORA HLDG OPEN 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 VALORA HLDG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VALORA HLDG OPEN has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and VALORA HLDG go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and VALORA HLDG

If you would invest (100.00) in VALORA HLDG OPEN on September 28, 2024 and sell it today you would earn a total of  100.00  from holding VALORA HLDG OPEN or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  VALORA HLDG OPEN

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.

VALORA HLDG OPEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VALORA HLDG OPEN has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, VALORA HLDG is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and VALORA HLDG

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

The idea behind Petroleo Brasileiro Petrobras and VALORA HLDG OPEN 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.