Correlation Between Positivo Tecnologia and Petro Rio

Can any of the company-specific risk be diversified away by investing in both Positivo Tecnologia and Petro Rio 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 Positivo Tecnologia and Petro Rio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Positivo Tecnologia SA and Petro Rio SA, you can compare the effects of market volatilities on Positivo Tecnologia and Petro Rio 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 Positivo Tecnologia with a short position of Petro Rio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Positivo Tecnologia and Petro Rio.

Diversification Opportunities for Positivo Tecnologia and Petro Rio

0.13

Correlation Coefficient

Positivo Tecnologia  Petro Rio

Average diversification

The 3 months correlation between Positivo and Petro is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Positivo Tecnologia SA and Petro Rio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Rio SA and Positivo Tecnologia 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 Positivo Tecnologia SA are associated (or correlated) with Petro Rio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Rio SA has no effect on the direction of Positivo Tecnologia i.e., Positivo Tecnologia and Petro Rio go up and down completely randomly.

Pair Corralation between Positivo Tecnologia and Petro Rio

Assuming the 90 days trading horizon Positivo Tecnologia SA is expected to under-perform the Petro Rio. In addition to that, Positivo Tecnologia is 1.75 times more volatile than Petro Rio SA. It trades about -0.07 of its total potential returns per unit of risk. Petro Rio SA is currently generating about -0.02 per unit of volatility. If you would invest  4,274  in Petro Rio SA on September 15, 2024 and sell it today you would lose (124.00) from holding Petro Rio SA or give up 2.9% of portfolio value over 90 days.

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

Positivo Tecnologia SA  vs.  Petro Rio SA

Positivo Tecnologia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Positivo Tecnologia SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Petro Rio SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petro Rio SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Petro Rio is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Positivo Tecnologia and Petro Rio

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

The idea behind Positivo Tecnologia SA and Petro Rio SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.