Correlation Between Petroleo Brasileiro and Thaire Life

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

Diversification Opportunities for Petroleo Brasileiro and Thaire Life

0.41

Correlation Coefficient

Petroleo Brasileiro  Thaire Life

Very weak diversification

The 3 months correlation between Petroleo and Thaire is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Thaire Life Assurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thaire Life Assurance 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 Thaire Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thaire Life Assurance has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Thaire Life go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Thaire Life

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 859.18 times less return on investment than Thaire Life. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 53.81 times less risky than Thaire Life. It trades about 0.01 of its potential returns per unit of risk. Thaire Life Assurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  174.00  in Thaire Life Assurance on September 28, 2024 and sell it today you would lose (14.00) from holding Thaire Life Assurance or give up 8.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.1%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Thaire Life Assurance

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.

Thaire Life Assurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thaire Life Assurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Petroleo Brasileiro and Thaire Life

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

The idea behind Petroleo Brasileiro Petrobras and Thaire Life Assurance 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.