Correlation Between Cellnex Telecom and Petroleo Brasileiro

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

Diversification Opportunities for Cellnex Telecom and Petroleo Brasileiro

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cellnex and Petroleo is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Petroleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Petroleo Brasileiro go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Petroleo Brasileiro

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the Petroleo Brasileiro. But the stock apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 1.43 times less risky than Petroleo Brasileiro. The stock trades about -0.05 of its potential returns per unit of risk. The Petroleo Brasileiro SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  471.00  in Petroleo Brasileiro SA on April 24, 2025 and sell it today you would earn a total of  26.00  from holding Petroleo Brasileiro SA or generate 5.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Cellnex Telecom SA  vs.  Petroleo Brasileiro SA

 Performance 
       Timeline  
Cellnex Telecom SA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Petroleo Brasileiro 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Cellnex Telecom and Petroleo Brasileiro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cellnex Telecom and Petroleo Brasileiro

The main advantage of trading using opposite Cellnex Telecom and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom position performs unexpectedly, Petroleo 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.
The idea behind Cellnex Telecom SA and Petroleo 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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