Correlation Between Petroleo Brasileiro and Pandora A/S
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Pandora A/S 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 Pandora A/S 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 Pandora AS, you can compare the effects of market volatilities on Petroleo Brasileiro and Pandora A/S 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 Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Pandora A/S.
Diversification Opportunities for Petroleo Brasileiro and Pandora A/S
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and Pandora is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S 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 Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Pandora A/S go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Pandora A/S
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Pandora A/S. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.06 times less risky than Pandora A/S. The stock trades about -0.01 of its potential returns per unit of risk. The Pandora AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,020 in Pandora AS on September 26, 2024 and sell it today you would earn a total of 3,000 from holding Pandora AS or generate 21.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Pandora AS
Performance |
| Timeline |
| Petroleo Brasileiro |
| Pandora A/S |
Petroleo Brasileiro and Pandora A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Pandora A/S
The main advantage of trading using opposite Petroleo Brasileiro and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.The idea behind Petroleo Brasileiro Petrobras and Pandora AS 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.| Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. Herms International Socit | Pandora A/S vs. CHRISTIAN DIOR ADR14EO2 | Pandora A/S vs. Christian Dior SE |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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