Correlation Between Petroleo Brasileiro and BANK CENTRAL

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

Diversification Opportunities for Petroleo Brasileiro and BANK CENTRAL

0.39

Correlation Coefficient

Petroleo Brasileiro  BANK CENTRAL

Weak diversification

The 3 months correlation between Petroleo and BANK is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA 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 BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and BANK CENTRAL go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and BANK CENTRAL

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.31 times more return on investment than BANK CENTRAL. However, Petroleo Brasileiro is 1.31 times more volatile than BANK CENTRAL ASIA. It trades about 0.08 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about 0.02 per unit of risk. If you would invest  642.00  in Petroleo Brasileiro Petrobras on September 24, 2024 and sell it today you would earn a total of  662.00  from holding Petroleo Brasileiro Petrobras or generate 103.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.22%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  BANK CENTRAL ASIA

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.

BANK CENTRAL ASIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK CENTRAL ASIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Petroleo Brasileiro and BANK CENTRAL

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

The idea behind Petroleo Brasileiro Petrobras and BANK CENTRAL ASIA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.