Correlation Between Petro Rio and Capcom Co

Can any of the company-specific risk be diversified away by investing in both Petro Rio and Capcom Co 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 Petro Rio and Capcom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petro Rio SA and Capcom Co Ltd, you can compare the effects of market volatilities on Petro Rio and Capcom Co 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 Petro Rio with a short position of Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Rio and Capcom Co.

Diversification Opportunities for Petro Rio and Capcom Co

0.56

Correlation Coefficient

Petro Rio  Capcom Co

Very weak diversification

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

Pair Corralation between Petro Rio and Capcom Co

Assuming the 90 days horizon Petro Rio SA is expected to generate 0.9 times more return on investment than Capcom Co. However, Petro Rio SA is 1.11 times less risky than Capcom Co. It trades about 0.18 of its potential returns per unit of risk. Capcom Co Ltd is currently generating about -0.05 per unit of risk. If you would invest  617.00  in Petro Rio SA on May 5, 2025 and sell it today you would earn a total of  178.00  from holding Petro Rio SA or generate 28.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Petro Rio SA  vs.  Capcom Co Ltd

Petro Rio SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Rio SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Petro Rio showed solid returns over the last few months and may actually be approaching a breakup point.

Capcom Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capcom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Petro Rio and Capcom Co

The main advantage of trading using opposite Petro Rio and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Rio position performs unexpectedly, Capcom Co 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 Capcom Co will offset losses from the drop in Capcom Co's long position.

The idea behind Petro Rio SA and Capcom Co Ltd 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 CEOs Directory module to screen CEOs from public companies around the world.