Correlation Between Petroleo Brasileiro and Adshares

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Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Adshares 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 Adshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro SA and Adshares, you can compare the effects of market volatilities on Petroleo Brasileiro and Adshares 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 Adshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Adshares.

Diversification Opportunities for Petroleo Brasileiro and Adshares

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Petroleo and Adshares is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro SA and Adshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adshares 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 SA are associated (or correlated) with Adshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adshares has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Adshares go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Adshares

Considering the 90-day investment horizon Petroleo Brasileiro SA is expected to generate 0.61 times more return on investment than Adshares. However, Petroleo Brasileiro SA is 1.64 times less risky than Adshares. It trades about 0.09 of its potential returns per unit of risk. Adshares is currently generating about -0.05 per unit of risk. If you would invest  663.00  in Petroleo Brasileiro SA on September 1, 2022 and sell it today you would earn a total of  478.00  from holding Petroleo Brasileiro SA or generate 72.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy96.89%
ValuesDaily Returns

Petroleo Brasileiro SA  vs.  Adshares

 Performance (%) 
       Timeline  
Petroleo Brasileiro 
Petroleo Performance
0 of 100
Over the last 90 days Petroleo Brasileiro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish 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.

Petroleo Price Channel

Adshares 
Adshares Performance
0 of 100
Over the last 90 days Adshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's fundamental indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for Adshares investors.

Adshares Price Channel

Petroleo Brasileiro and Adshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Petroleo Brasileiro and Adshares

The main advantage of trading using opposite Petroleo Brasileiro and Adshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Adshares 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 Adshares will offset losses from the drop in Adshares' long position.
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The idea behind Petroleo Brasileiro SA and Adshares 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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