Correlation Between Petroleo Brasileiro and Aalborg Boldspilklub
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Aalborg Boldspilklub 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 Aalborg Boldspilklub 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 Aalborg Boldspilklub AS, you can compare the effects of market volatilities on Petroleo Brasileiro and Aalborg Boldspilklub 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 Aalborg Boldspilklub. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Aalborg Boldspilklub.
Diversification Opportunities for Petroleo Brasileiro and Aalborg Boldspilklub
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and Aalborg is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Aalborg Boldspilklub AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalborg Boldspilklub 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 Aalborg Boldspilklub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalborg Boldspilklub has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Aalborg Boldspilklub go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Aalborg Boldspilklub
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Aalborg Boldspilklub. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.23 times less risky than Aalborg Boldspilklub. The stock trades about -0.16 of its potential returns per unit of risk. The Aalborg Boldspilklub AS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,580 in Aalborg Boldspilklub AS on September 19, 2024 and sell it today you would lose (140.00) from holding Aalborg Boldspilklub AS or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Aalborg Boldspilklub AS
Performance |
| Timeline |
| Petroleo Brasileiro |
| Aalborg Boldspilklub |
Petroleo Brasileiro and Aalborg Boldspilklub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Aalborg Boldspilklub
The main advantage of trading using opposite Petroleo Brasileiro and Aalborg Boldspilklub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Aalborg Boldspilklub 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 Aalborg Boldspilklub will offset losses from the drop in Aalborg Boldspilklub'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 |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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