Correlation Between Petroleo Brasileiro and Amundi Physical

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

Diversification Opportunities for Petroleo Brasileiro and Amundi Physical

-0.53

Correlation Coefficient

Petroleo Brasileiro  Amundi Physical

Excellent diversification

The 3 months correlation between Petroleo and Amundi is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Amundi Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Physical Gold 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 Amundi Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Physical Gold has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Amundi Physical go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Amundi Physical

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Amundi Physical. In addition to that, Petroleo Brasileiro is 2.1 times more volatile than Amundi Physical Gold. It trades about -0.24 of its total potential returns per unit of risk. Amundi Physical Gold is currently generating about -0.18 per unit of volatility. If you would invest  857,538  in Amundi Physical Gold on September 23, 2024 and sell it today you would lose (29,888) from holding Amundi Physical Gold or give up 3.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Amundi Physical Gold

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.

Amundi Physical Gold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Physical Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi Physical 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 Petroleo Brasileiro and Amundi Physical

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

The idea behind Petroleo Brasileiro Petrobras and Amundi Physical Gold 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.