Correlation Between Petroleo Brasileiro and Grupo Minsa

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

Diversification Opportunities for Petroleo Brasileiro and Grupo Minsa

-0.49

Correlation Coefficient

Petroleo Brasileiro  Grupo Minsa

Very good diversification

The 3 months correlation between Petroleo and Grupo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Grupo Minsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Minsa SAB 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 Grupo Minsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Minsa SAB has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Grupo Minsa go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Grupo Minsa

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Grupo Minsa. In addition to that, Petroleo Brasileiro is 3.55 times more volatile than Grupo Minsa SAB. It trades about -0.05 of its total potential returns per unit of risk. Grupo Minsa SAB is currently generating about 0.22 per unit of volatility. If you would invest  855.00  in Grupo Minsa SAB on September 28, 2024 and sell it today you would earn a total of  54.00  from holding Grupo Minsa SAB or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Grupo Minsa SAB

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.

Grupo Minsa SAB

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Minsa SAB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Minsa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Grupo Minsa

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

The idea behind Petroleo Brasileiro Petrobras and Grupo Minsa SAB 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.