Correlation Between Petroleo Brasileiro and Sothebys

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Sothebys 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 Sothebys 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 Sothebys 7375 percent, you can compare the effects of market volatilities on Petroleo Brasileiro and Sothebys 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 Sothebys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Sothebys.

Diversification Opportunities for Petroleo Brasileiro and Sothebys

-0.03

Correlation Coefficient

Petroleo Brasileiro  Sothebys

Good diversification

The 3 months correlation between Petroleo and Sothebys is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Sothebys 7375 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sothebys 7375 percent 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 Sothebys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sothebys 7375 percent has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Sothebys go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Sothebys

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Sothebys. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.19 times less risky than Sothebys. The stock trades about -0.06 of its potential returns per unit of risk. The Sothebys 7375 percent is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,692  in Sothebys 7375 percent on September 27, 2024 and sell it today you would lose (449.00) from holding Sothebys 7375 percent or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.3%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Sothebys 7375 percent

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.

Sothebys 7375 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sothebys 7375 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sothebys is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Sothebys

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

The idea behind Petroleo Brasileiro Petrobras and Sothebys 7375 percent 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.