Correlation Between Petroleo Brasileiro and Bank Polska

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

Diversification Opportunities for Petroleo Brasileiro and Bank Polska

0.03

Correlation Coefficient

Petroleo Brasileiro  Bank Polska

Significant diversification

The 3 months correlation between Petroleo and Bank is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Bank Polska Kasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Polska Kasa 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 Bank Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Polska Kasa has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Bank Polska go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Bank Polska

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.76 times more return on investment than Bank Polska. However, Petroleo Brasileiro Petrobras is 1.31 times less risky than Bank Polska. It trades about -0.07 of its potential returns per unit of risk. Bank Polska Kasa is currently generating about -0.05 per unit of risk. If you would invest  1,402  in Petroleo Brasileiro Petrobras on September 26, 2024 and sell it today you would lose (109.00) from holding Petroleo Brasileiro Petrobras or give up 7.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Bank Polska Kasa

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.

Bank Polska Kasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Polska Kasa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Petroleo Brasileiro and Bank Polska

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

The idea behind Petroleo Brasileiro Petrobras and Bank Polska Kasa 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.