Correlation Between Petroleo Brasileiro and OK ZIMBABWE

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

Diversification Opportunities for Petroleo Brasileiro and OK ZIMBABWE

0.08

Correlation Coefficient

Petroleo Brasileiro  OK ZIMBABWE

Significant diversification

The 3 months correlation between Petroleo and OKZ is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and OK ZIMBABWE LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OK ZIMBABWE LIMITED 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 OK ZIMBABWE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OK ZIMBABWE LIMITED has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and OK ZIMBABWE go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and OK ZIMBABWE

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 2.64 times less return on investment than OK ZIMBABWE. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 3.57 times less risky than OK ZIMBABWE. It trades about 0.06 of its potential returns per unit of risk. OK ZIMBABWE LIMITED is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,301,671  in OK ZIMBABWE LIMITED on September 28, 2024 and sell it today you would lose (2,296,371) from holding OK ZIMBABWE LIMITED or give up 99.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.52%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  OK ZIMBABWE LIMITED

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.

OK ZIMBABWE LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OK ZIMBABWE LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Petroleo Brasileiro and OK ZIMBABWE

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

The idea behind Petroleo Brasileiro Petrobras and OK ZIMBABWE LIMITED 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.