Correlation Between Petroleo Brasileiro and Guangshen Railway
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Guangshen Railway 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 Guangshen Railway 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 Guangshen Railway, you can compare the effects of market volatilities on Petroleo Brasileiro and Guangshen Railway 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 Guangshen Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Guangshen Railway.
Diversification Opportunities for Petroleo Brasileiro and Guangshen Railway
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and Guangshen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Guangshen Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangshen Railway 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 Guangshen Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangshen Railway has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Guangshen Railway go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Guangshen Railway
If you would invest 1,362 in Petroleo Brasileiro Petrobras on September 12, 2024 and sell it today you would earn a total of 71.00 from holding Petroleo Brasileiro Petrobras or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Guangshen Railway
Performance |
| Timeline |
| Petroleo Brasileiro |
| Guangshen Railway |
Petroleo Brasileiro and Guangshen Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Guangshen Railway
The main advantage of trading using opposite Petroleo Brasileiro and Guangshen Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Guangshen Railway 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 Guangshen Railway will offset losses from the drop in Guangshen Railway'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 |
| Guangshen Railway vs. Trinity Industries | Guangshen Railway vs. CSX Corporation | Guangshen Railway vs. Norfolk Southern | Guangshen Railway vs. Greenbrier Companies |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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