Correlation Between Petroleo Brasileiro and U36547AF1

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and U36547AF1 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 U36547AF1 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 GPS 3625 01 OCT 29, you can compare the effects of market volatilities on Petroleo Brasileiro and U36547AF1 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 U36547AF1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and U36547AF1.

Diversification Opportunities for Petroleo Brasileiro and U36547AF1

-0.26

Correlation Coefficient

Petroleo Brasileiro  U36547AF1

Very good diversification

The 3 months correlation between Petroleo and U36547AF1 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and GPS 3625 01 OCT 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPS 3625 01 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 U36547AF1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPS 3625 01 has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and U36547AF1 go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and U36547AF1

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.93 times more return on investment than U36547AF1. However, Petroleo Brasileiro Petrobras is 1.08 times less risky than U36547AF1. It trades about -0.04 of its potential returns per unit of risk. GPS 3625 01 OCT 29 is currently generating about -0.07 per unit of risk. If you would invest  1,423  in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would lose (62.00) from holding Petroleo Brasileiro Petrobras or give up 4.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.5%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  GPS 3625 01 OCT 29

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.

GPS 3625 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPS 3625 01 OCT 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for GPS 3625 01 OCT 29 investors.

Pair Trading with Petroleo Brasileiro and U36547AF1

The main advantage of trading using opposite Petroleo Brasileiro and U36547AF1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, U36547AF1 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 U36547AF1 will offset losses from the drop in U36547AF1's long position.

The idea behind Petroleo Brasileiro Petrobras and GPS 3625 01 OCT 29 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.