Correlation Between CTEEP Companhia and Petrleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both CTEEP Companhia and Petrleo Brasileiro 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 CTEEP Companhia and Petrleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTEEP Companhia and Petrleo Brasileiro SA, you can compare the effects of market volatilities on CTEEP Companhia and Petrleo Brasileiro 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 CTEEP Companhia with a short position of Petrleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTEEP Companhia and Petrleo Brasileiro.
Diversification Opportunities for CTEEP Companhia and Petrleo Brasileiro
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between CTEEP and Petrleo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CTEEP Companhia and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleo Brasileiro and CTEEP Companhia 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 CTEEP Companhia are associated (or correlated) with Petrleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrleo Brasileiro has no effect on the direction of CTEEP Companhia i.e., CTEEP Companhia and Petrleo Brasileiro go up and down completely randomly.
Pair Corralation between CTEEP Companhia and Petrleo Brasileiro
Assuming the 90 days trading horizon CTEEP Companhia is expected to under-perform the Petrleo Brasileiro. But the preferred stock apears to be less risky and, when comparing its historical volatility, CTEEP Companhia is 1.54 times less risky than Petrleo Brasileiro. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Petrleo Brasileiro SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,751 in Petrleo Brasileiro SA on September 1, 2024 and sell it today you would earn a total of 511.00 from holding Petrleo Brasileiro SA or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
CTEEP Companhia vs. Petrleo Brasileiro SA
Performance |
| Timeline |
| CTEEP Companhia |
| Petrleo Brasileiro |
CTEEP Companhia and Petrleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTEEP Companhia and Petrleo Brasileiro
The main advantage of trading using opposite CTEEP Companhia and Petrleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTEEP Companhia position performs unexpectedly, Petrleo Brasileiro 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 Petrleo Brasileiro will offset losses from the drop in Petrleo Brasileiro's long position.| CTEEP Companhia vs. Transmissora Aliana de | CTEEP Companhia vs. Companhia Paranaense de | CTEEP Companhia vs. BB Seguridade Participacoes | CTEEP Companhia vs. Engie Brasil Energia |
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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 the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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