Correlation Between Parex Resources and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Parex Resources 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 Parex Resources and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parex Resources and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Parex Resources 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 Parex Resources with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parex Resources and Petroleo Brasileiro.
Diversification Opportunities for Parex Resources and Petroleo Brasileiro
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Parex and Petroleo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Parex Resources and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Parex Resources 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 Parex Resources 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 Parex Resources i.e., Parex Resources and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Parex Resources and Petroleo Brasileiro
Assuming the 90 days horizon Parex Resources is expected to generate 1.28 times more return on investment than Petroleo Brasileiro. However, Parex Resources is 1.28 times more volatile than Petroleo Brasileiro Petrobras. It trades about 0.34 of its potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.24 per unit of risk. If you would invest 941.00 in Parex Resources on August 25, 2024 and sell it today you would earn a total of 145.00 from holding Parex Resources or generate 15.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parex Resources vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Parex Resources |
| Petroleo Brasileiro |
Parex Resources and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parex Resources and Petroleo Brasileiro
The main advantage of trading using opposite Parex Resources and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parex Resources 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.| Parex Resources vs. Petroleo Brasileiro Petrobras | Parex Resources vs. Equinor ASA ADR | Parex Resources vs. Eni SpA ADR | Parex Resources vs. YPF Sociedad Anonima |
| Petroleo Brasileiro vs. Eshallgo Class A | Petroleo Brasileiro vs. Amtech Systems | Petroleo Brasileiro vs. Gold Fields Ltd | Petroleo Brasileiro vs. Aegean Airlines SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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