Correlation Between BB Seguridade and Petrleo Brasileiro

Can any of the company-specific risk be diversified away by investing in both BB Seguridade 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 BB Seguridade and Petrleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BB Seguridade Participacoes and Petrleo Brasileiro SA, you can compare the effects of market volatilities on BB Seguridade 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 BB Seguridade with a short position of Petrleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Petrleo Brasileiro.

Diversification Opportunities for BB Seguridade and Petrleo Brasileiro

-0.68

Correlation Coefficient

BB Seguridade  Petrleo Brasileiro

Excellent diversification

The 3 months correlation between BBSE3 and Petrleo is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleo Brasileiro and BB Seguridade 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 BB Seguridade Participacoes 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 BB Seguridade i.e., BB Seguridade and Petrleo Brasileiro go up and down completely randomly.

Pair Corralation between BB Seguridade and Petrleo Brasileiro

Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to under-perform the Petrleo Brasileiro. But the stock apears to be less risky and, when comparing its historical volatility, BB Seguridade Participacoes is 1.02 times less risky than Petrleo Brasileiro. The stock trades about -0.24 of its potential returns per unit of risk. The Petrleo Brasileiro SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,953  in Petrleo Brasileiro SA on April 24, 2025 and sell it today you would earn a total of  246.00  from holding Petrleo Brasileiro SA or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BB Seguridade Participacoes  vs.  Petrleo Brasileiro SA

BB Seguridade Partic

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Petrleo Brasileiro

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrleo Brasileiro SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Petrleo Brasileiro may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BB Seguridade and Petrleo Brasileiro

The main advantage of trading using opposite BB Seguridade and Petrleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade 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 BB Seguridade Participacoes 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.