Correlation Between Petroleo Brasileiro and Hercules Capital

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Hercules Capital 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 Petroleo Brasileiro and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Hercules Capital, you can compare the effects of market volatilities on Petroleo Brasileiro and Hercules Capital 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 Petroleo Brasileiro with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Hercules Capital.

Diversification Opportunities for Petroleo Brasileiro and Hercules Capital

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Petroleo and Hercules is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Petroleo Brasileiro 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 Petroleo Brasileiro Petrobras are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Hercules Capital go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Hercules Capital

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 2.68 times less return on investment than Hercules Capital. In addition to that, Petroleo Brasileiro is 1.23 times more volatile than Hercules Capital. It trades about 0.02 of its total potential returns per unit of risk. Hercules Capital is currently generating about 0.07 per unit of volatility. If you would invest  1,364  in Hercules Capital on September 26, 2024 and sell it today you would earn a total of  470.00  from holding Hercules Capital or generate 34.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.42%
ValuesDaily Returns

Petroleo Brasileiro Petrobras  vs.  Hercules Capital

 Performance 
       Timeline  
Petroleo Brasileiro 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
Hercules Capital 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Petroleo Brasileiro and Hercules Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Petroleo Brasileiro and Hercules Capital

The main advantage of trading using opposite Petroleo Brasileiro and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Hercules Capital 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.
The idea behind Petroleo Brasileiro Petrobras and Hercules Capital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals