Correlation Between Petroleo Brasileiro and Ganfeng Lithium

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

Diversification Opportunities for Petroleo Brasileiro and Ganfeng Lithium

0.0

Correlation Coefficient

Petroleo Brasileiro  Ganfeng Lithium

Pay attention - limited upside

The 3 months correlation between Petroleo and Ganfeng is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Ganfeng Lithium go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Ganfeng Lithium

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Ganfeng Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 3.72 times less risky than Ganfeng Lithium. The stock trades about -0.06 of its potential returns per unit of risk. The Ganfeng Lithium Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Ganfeng Lithium Co on September 20, 2024 and sell it today you would earn a total of  39.00  from holding Ganfeng Lithium Co or generate 17.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Ganfeng Lithium 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.

Ganfeng Lithium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ganfeng Lithium Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ganfeng Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Ganfeng Lithium

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

The idea behind Petroleo Brasileiro Petrobras and Ganfeng Lithium 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.