Correlation Between Petroleo Brasileiro and Kmc Properties

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

Diversification Opportunities for Petroleo Brasileiro and Kmc Properties

0.09

Correlation Coefficient

Petroleo Brasileiro  Kmc Properties

Significant diversification

The 3 months correlation between Petroleo and Kmc is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Kmc Properties ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmc Properties ASA 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 Kmc Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmc Properties ASA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Kmc Properties go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Kmc Properties

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.11 times more return on investment than Kmc Properties. However, Petroleo Brasileiro Petrobras is 8.92 times less risky than Kmc Properties. It trades about 0.01 of its potential returns per unit of risk. Kmc Properties ASA is currently generating about -0.16 per unit of risk. If you would invest  1,453  in Petroleo Brasileiro Petrobras on September 13, 2024 and sell it today you would earn a total of  7.00  from holding Petroleo Brasileiro Petrobras or generate 0.48% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  Kmc Properties ASA

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Kmc Properties ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kmc Properties ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Petroleo Brasileiro and Kmc Properties

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

The idea behind Petroleo Brasileiro Petrobras and Kmc Properties ASA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.