Correlation Between Petroleo Brasileiro and Yoma Strategic

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

Diversification Opportunities for Petroleo Brasileiro and Yoma Strategic

0.03

Correlation Coefficient

Petroleo Brasileiro  Yoma Strategic

Significant diversification

The 3 months correlation between Petroleo and Yoma is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Yoma Strategic Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoma Strategic Holdings 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 Yoma Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoma Strategic Holdings has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Yoma Strategic go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Yoma Strategic

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.43 times more return on investment than Yoma Strategic. However, Petroleo Brasileiro Petrobras is 2.34 times less risky than Yoma Strategic. It trades about -0.12 of its potential returns per unit of risk. Yoma Strategic Holdings is currently generating about -0.22 per unit of risk. If you would invest  1,326  in Petroleo Brasileiro Petrobras on September 29, 2024 and sell it today you would lose (63.00) from holding Petroleo Brasileiro Petrobras or give up 4.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Yoma Strategic Holdings

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.

Yoma Strategic Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yoma Strategic Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Petroleo Brasileiro and Yoma Strategic

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

The idea behind Petroleo Brasileiro Petrobras and Yoma Strategic Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.