Correlation Between Petroleo Brasileiro and Long Bon
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Long Bon 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 Long Bon 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 Long Bon International, you can compare the effects of market volatilities on Petroleo Brasileiro and Long Bon 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 Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Long Bon.
Diversification Opportunities for Petroleo Brasileiro and Long Bon
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Long is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International 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 Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Long Bon go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Long Bon
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Long Bon. In addition to that, Petroleo Brasileiro is 1.87 times more volatile than Long Bon International. It trades about -0.24 of its total potential returns per unit of risk. Long Bon International is currently generating about -0.34 per unit of volatility. If you would invest 2,130 in Long Bon International on September 23, 2024 and sell it today you would lose (155.00) from holding Long Bon International or give up 7.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Long Bon International
Performance |
| Timeline |
| Petroleo Brasileiro |
| Long Bon International |
Petroleo Brasileiro and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Long Bon
The main advantage of trading using opposite Petroleo Brasileiro and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. TotalEnergies SE ADR | Petroleo Brasileiro vs. Equinor ASA ADR |
| Long Bon vs. Hung Sheng Construction | Long Bon vs. Kee Tai Properties | Long Bon vs. BES Engineering Co | Long Bon vs. Chainqui Construction Development |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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