Correlation Between Petrleo Brasileiro and Grupo Carso

Can any of the company-specific risk be diversified away by investing in both Petrleo Brasileiro and Grupo Carso 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 Petrleo Brasileiro and Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrleo Brasileiro SA and Grupo Carso SAB, you can compare the effects of market volatilities on Petrleo Brasileiro and Grupo Carso 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 Petrleo Brasileiro with a short position of Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleo Brasileiro and Grupo Carso.

Diversification Opportunities for Petrleo Brasileiro and Grupo Carso

0.52

Correlation Coefficient

Petrleo Brasileiro  Grupo Carso

Very weak diversification

The 3 months correlation between Petrleo and Grupo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and Petrleo 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 Petrleo Brasileiro SA are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Petrleo Brasileiro i.e., Petrleo Brasileiro and Grupo Carso go up and down completely randomly.

Pair Corralation between Petrleo Brasileiro and Grupo Carso

Assuming the 90 days trading horizon Petrleo Brasileiro SA is expected to generate 1.07 times more return on investment than Grupo Carso. However, Petrleo Brasileiro is 1.07 times more volatile than Grupo Carso SAB. It trades about 0.08 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.06 per unit of risk. If you would invest  26,450  in Petrleo Brasileiro SA on December 29, 2024 and sell it today you would earn a total of  2,350  from holding Petrleo Brasileiro SA or generate 8.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Petrleo Brasileiro SA  vs.  Grupo Carso SAB

Petrleo Brasileiro

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrleo Brasileiro SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Petrleo Brasileiro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grupo Carso SAB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Carso may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Petrleo Brasileiro and Grupo Carso

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

The idea behind Petrleo Brasileiro SA and Grupo Carso SAB 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.