Correlation Between NK Lukoil and Petrleo Brasileiro

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

Diversification Opportunities for NK Lukoil and Petrleo Brasileiro

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between LUKOY and Petrleo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NK Lukoil PAO and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleo Brasileiro and NK Lukoil 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 NK Lukoil PAO 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 NK Lukoil i.e., NK Lukoil and Petrleo Brasileiro go up and down completely randomly.

Pair Corralation between NK Lukoil and Petrleo Brasileiro

If you would invest  696.00  in NK Lukoil PAO on December 29, 2023 and sell it today you would earn a total of  0.00  from holding NK Lukoil PAO or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NK Lukoil PAO  vs.  Petrleo Brasileiro SA

 Performance 
       Timeline  
NK Lukoil PAO 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days NK Lukoil PAO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, NK Lukoil is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Petrleo Brasileiro 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Petrleo Brasileiro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Petrleo Brasileiro is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NK Lukoil and Petrleo Brasileiro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NK Lukoil and Petrleo Brasileiro

The main advantage of trading using opposite NK Lukoil and Petrleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NK Lukoil 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.
The idea behind NK Lukoil PAO and Petrleo Brasileiro SA 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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