Correlation Between Petroleo Brasileiro and KTBST Mixed

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

Diversification Opportunities for Petroleo Brasileiro and KTBST Mixed

0.36

Correlation Coefficient

Petroleo Brasileiro  KTBST Mixed

Weak diversification

The 3 months correlation between Petroleo and KTBST is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and KTBST Mixed Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTBST Mixed Leasehold 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 KTBST Mixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTBST Mixed Leasehold has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and KTBST Mixed go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and KTBST Mixed

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the KTBST Mixed. In addition to that, Petroleo Brasileiro is 1.44 times more volatile than KTBST Mixed Leasehold. It trades about -0.03 of its total potential returns per unit of risk. KTBST Mixed Leasehold is currently generating about 0.01 per unit of volatility. If you would invest  638.00  in KTBST Mixed Leasehold on September 14, 2024 and sell it today you would earn a total of  2.00  from holding KTBST Mixed Leasehold or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  KTBST Mixed Leasehold

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.

KTBST Mixed Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KTBST Mixed Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, KTBST Mixed is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Petroleo Brasileiro and KTBST Mixed

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

The idea behind Petroleo Brasileiro Petrobras and KTBST Mixed Leasehold 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.