Correlation Between Petroleo Brasileiro and Unique Engineering

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

Diversification Opportunities for Petroleo Brasileiro and Unique Engineering

0.38

Correlation Coefficient

Petroleo Brasileiro  Unique Engineering

Weak diversification

The 3 months correlation between Petroleo and Unique is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Unique Engineering and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unique Engineering and 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 Unique Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unique Engineering and has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Unique Engineering go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Unique Engineering

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Unique Engineering. In addition to that, Petroleo Brasileiro is 2.15 times more volatile than Unique Engineering and. It trades about -0.19 of its total potential returns per unit of risk. Unique Engineering and is currently generating about -0.39 per unit of volatility. If you would invest  280.00  in Unique Engineering and on September 27, 2024 and sell it today you would lose (18.00) from holding Unique Engineering and or give up 6.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Unique Engineering and

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 unsteady 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.

Unique Engineering and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unique Engineering and 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-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Petroleo Brasileiro and Unique Engineering

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

The idea behind Petroleo Brasileiro Petrobras and Unique Engineering and 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.