Correlation Between Petroleo Brasileiro and Shore Capital

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

Diversification Opportunities for Petroleo Brasileiro and Shore Capital

0.0

Correlation Coefficient

Petroleo Brasileiro  Shore Capital

Pay attention - limited upside

The 3 months correlation between Petroleo and Shore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Shore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Capital Group 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 Shore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shore Capital Group has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Shore Capital go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Shore Capital

If you would invest (100.00) in Shore Capital Group on September 26, 2024 and sell it today you would earn a total of  100.00  from holding Shore Capital Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Shore Capital Group

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.

Shore Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shore Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Shore Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Petroleo Brasileiro and Shore Capital

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

The idea behind Petroleo Brasileiro Petrobras and Shore Capital Group 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.