Correlation Between Petroleo Brasileiro and Celo

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

Diversification Opportunities for Petroleo Brasileiro and Celo

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Petroleo and Celo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro SA and Celo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celo 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 Celo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celo has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Celo go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Celo

Considering the 90-day investment horizon Petroleo Brasileiro SA is expected to generate 0.48 times more return on investment than Celo. However, Petroleo Brasileiro SA is 2.1 times less risky than Celo. It trades about 0.06 of its potential returns per unit of risk. Celo is currently generating about -0.1 per unit of risk. If you would invest  529.00  in Petroleo Brasileiro SA on August 31, 2022 and sell it today you would earn a total of  585.00  from holding Petroleo Brasileiro SA or generate 110.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy58.15%
ValuesDaily Returns

Petroleo Brasileiro SA  vs.  Celo

 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

Celo 
Celo Performance
0 of 100
Over the last 90 days Celo 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 essential 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 Celo investors.

Celo Price Channel

Petroleo Brasileiro and Celo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Petroleo Brasileiro and Celo

The main advantage of trading using opposite Petroleo Brasileiro and Celo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Celo 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 Celo will offset losses from the drop in Celo's long position.
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The idea behind Petroleo Brasileiro SA and Celo 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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