Correlation Between Petroleo Brasileiro and Humble Group
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Humble Group 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 Humble Group 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 Humble Group AB, you can compare the effects of market volatilities on Petroleo Brasileiro and Humble Group 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 Humble Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Humble Group.
Diversification Opportunities for Petroleo Brasileiro and Humble Group
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and Humble is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Humble Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Group AB 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 Humble Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Group AB has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Humble Group go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Humble Group
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.73 times more return on investment than Humble Group. However, Petroleo Brasileiro Petrobras is 1.36 times less risky than Humble Group. It trades about 0.07 of its potential returns per unit of risk. Humble Group AB is currently generating about 0.03 per unit of risk. If you would invest 762.00 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would earn a total of 599.00 from holding Petroleo Brasileiro Petrobras or generate 78.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Humble Group AB
Performance |
| Timeline |
| Petroleo Brasileiro |
| Humble Group AB |
Petroleo Brasileiro and Humble Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Humble Group
The main advantage of trading using opposite Petroleo Brasileiro and Humble Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Humble Group 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 Humble Group will offset losses from the drop in Humble Group'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 |
| Humble Group vs. Samhllsbyggnadsbolaget i Norden | Humble Group vs. Media and Games | Humble Group vs. Hexatronic Group AB | Humble Group vs. Sinch AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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