Correlation Between Petroleo Brasileiro and OCA Acquisition

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

Diversification Opportunities for Petroleo Brasileiro and OCA Acquisition

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Petroleo and OCA Acquisition is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and OCA Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCA Acquisition Corp 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 OCA Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCA Acquisition Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and OCA Acquisition go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and OCA Acquisition

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 10.03 times more return on investment than OCA Acquisition. However, Petroleo Brasileiro is 10.03 times more volatile than OCA Acquisition Corp. It trades about 0.06 of its potential returns per unit of risk. OCA Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest  557.00  in Petroleo Brasileiro Petrobras on September 2, 2022 and sell it today you would earn a total of  612.00  from holding Petroleo Brasileiro Petrobras or generate 109.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy88.33%
ValuesDaily Returns

Petroleo Brasileiro Petrobras  vs.  OCA Acquisition Corp

 Performance (%) 
       Timeline  
Petroleo Brasileiro 
Petroleo Performance
0 of 100
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 uncertain 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

OCA Acquisition Corp 
OCA Acquisition Performance
19 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in OCA Acquisition Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, OCA Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

OCA Acquisition Price Channel

Petroleo Brasileiro and OCA Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Petroleo Brasileiro and OCA Acquisition

The main advantage of trading using opposite Petroleo Brasileiro and OCA Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, OCA Acquisition 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 OCA Acquisition will offset losses from the drop in OCA Acquisition's long position.
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The idea behind Petroleo Brasileiro Petrobras and OCA Acquisition Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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