Correlation Between Petroleo Brasileiro and Meso Numismatics

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

Diversification Opportunities for Petroleo Brasileiro and Meso Numismatics

-0.54

Correlation Coefficient

Petroleo Brasileiro  Meso Numismatics

Excellent diversification

The 3 months correlation between Petroleo and Meso is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Meso Numismatics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meso Numismatics 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 Meso Numismatics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meso Numismatics has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Meso Numismatics go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Meso Numismatics

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Meso Numismatics. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 12.66 times less risky than Meso Numismatics. The stock trades about -0.09 of its potential returns per unit of risk. The Meso Numismatics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2.75  in Meso Numismatics on September 25, 2024 and sell it today you would earn a total of  1.25  from holding Meso Numismatics or generate 45.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Meso Numismatics

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 conflicting 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.

Meso Numismatics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meso Numismatics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Meso Numismatics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Meso Numismatics

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

The idea behind Petroleo Brasileiro Petrobras and Meso Numismatics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.