Correlation Between Petroleo Brasileiro and Globrands

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

Diversification Opportunities for Petroleo Brasileiro and Globrands

-0.07

Correlation Coefficient

Petroleo Brasileiro  Globrands

Good diversification

The 3 months correlation between Petroleo and Globrands is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Globrands Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globrands Group 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 Globrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globrands Group has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Globrands go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Globrands

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Globrands. In addition to that, Petroleo Brasileiro is 1.19 times more volatile than Globrands Group. It trades about -0.04 of its total potential returns per unit of risk. Globrands Group is currently generating about 0.31 per unit of volatility. If you would invest  3,941,130  in Globrands Group on September 14, 2024 and sell it today you would earn a total of  760,870  from holding Globrands Group or generate 19.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.88%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Globrands Group

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.

Globrands Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globrands Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Globrands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Globrands

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

The idea behind Petroleo Brasileiro Petrobras and Globrands Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.