Correlation Between Petroleo Brasileiro and CSHG Renda
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and CSHG Renda 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 CSHG Renda 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 CSHG Renda Urbana, you can compare the effects of market volatilities on Petroleo Brasileiro and CSHG Renda 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 CSHG Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and CSHG Renda.
Diversification Opportunities for Petroleo Brasileiro and CSHG Renda
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and CSHG is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and CSHG Renda Urbana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSHG Renda Urbana 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 CSHG Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSHG Renda Urbana has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and CSHG Renda go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and CSHG Renda
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.76 times more return on investment than CSHG Renda. However, Petroleo Brasileiro Petrobras is 1.31 times less risky than CSHG Renda. It trades about 0.43 of its potential returns per unit of risk. CSHG Renda Urbana is currently generating about 0.25 per unit of risk. If you would invest 1,249 in Petroleo Brasileiro Petrobras on October 20, 2024 and sell it today you would earn a total of 123.00 from holding Petroleo Brasileiro Petrobras or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. CSHG Renda Urbana
Performance |
| Timeline |
| Petroleo Brasileiro |
| CSHG Renda Urbana |
Petroleo Brasileiro and CSHG Renda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and CSHG Renda
The main advantage of trading using opposite Petroleo Brasileiro and CSHG Renda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, CSHG Renda 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 CSHG Renda will offset losses from the drop in CSHG Renda'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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