Correlation Between Petroleo Brasileiro and Value Grupo

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

Diversification Opportunities for Petroleo Brasileiro and Value Grupo

-0.1

Correlation Coefficient

Petroleo Brasileiro  Value Grupo

Good diversification

The 3 months correlation between Petroleo and Value is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Value Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Grupo Financiero 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 Value Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Grupo Financiero has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Value Grupo go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Value Grupo

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Value Grupo. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 2.01 times less risky than Value Grupo. The stock trades about -0.04 of its potential returns per unit of risk. The Value Grupo Financiero is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,090  in Value Grupo Financiero on September 17, 2024 and sell it today you would earn a total of  214.00  from holding Value Grupo Financiero or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Value Grupo Financiero

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Value Grupo Financiero

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Petroleo Brasileiro and Value Grupo

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

The idea behind Petroleo Brasileiro Petrobras and Value Grupo Financiero 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.