Correlation Between Petroleo Brasileiro and Micro Star

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

Diversification Opportunities for Petroleo Brasileiro and Micro Star

-0.62

Correlation Coefficient

Petroleo Brasileiro  Micro Star

Excellent diversification

The 3 months correlation between Petroleo and Micro is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati 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 Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Micro Star go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Micro Star

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Micro Star. In addition to that, Petroleo Brasileiro is 1.05 times more volatile than Micro Star International Co. It trades about -0.02 of its total potential returns per unit of risk. Micro Star International Co is currently generating about 0.03 per unit of volatility. If you would invest  18,150  in Micro Star International Co on September 27, 2024 and sell it today you would earn a total of  300.00  from holding Micro Star International Co or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Micro Star International Co

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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Micro Star Internati

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Star International Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Micro Star may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Micro Star

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

The idea behind Petroleo Brasileiro Petrobras and Micro Star International Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.