Correlation Between Petroleo Brasileiro and Kuo Toong
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Kuo Toong 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 Kuo Toong 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 Kuo Toong International, you can compare the effects of market volatilities on Petroleo Brasileiro and Kuo Toong 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 Kuo Toong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Kuo Toong.
Diversification Opportunities for Petroleo Brasileiro and Kuo Toong
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and Kuo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Kuo Toong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Toong 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 Kuo Toong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Toong International has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Kuo Toong go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Kuo Toong
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.11 times more return on investment than Kuo Toong. However, Petroleo Brasileiro is 1.11 times more volatile than Kuo Toong International. It trades about 0.1 of its potential returns per unit of risk. Kuo Toong International is currently generating about 0.02 per unit of risk. If you would invest 1,372 in Petroleo Brasileiro Petrobras on September 13, 2024 and sell it today you would earn a total of 54.00 from holding Petroleo Brasileiro Petrobras or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Kuo Toong International
Performance |
| Timeline |
| Petroleo Brasileiro |
| Kuo Toong International |
Petroleo Brasileiro and Kuo Toong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Kuo Toong
The main advantage of trading using opposite Petroleo Brasileiro and Kuo Toong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Kuo Toong 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 Kuo Toong will offset losses from the drop in Kuo Toong's long position.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| Kuo Toong vs. Nankang Rubber Tire | Kuo Toong vs. Rich Development Co | Kuo Toong vs. Kung Sing Engineering | Kuo Toong vs. Advanced Lithium Electrochemistry |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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