Correlation Between Petroleo Brasileiro and Infosys
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Infosys 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 Infosys 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 Infosys Limited, you can compare the effects of market volatilities on Petroleo Brasileiro and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Infosys.
Diversification Opportunities for Petroleo Brasileiro and Infosys
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petroleo and Infosys is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Infosys go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Infosys
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Infosys. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.54 times less risky than Infosys. The stock trades about -0.22 of its potential returns per unit of risk. The Infosys Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Infosys Limited on September 24, 2024 and sell it today you would earn a total of 80.00 from holding Infosys Limited or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Infosys Limited
Performance |
| Timeline |
| Petroleo Brasileiro |
| Infosys Limited |
Petroleo Brasileiro and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Infosys
The main advantage of trading using opposite Petroleo Brasileiro and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' 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 |
| Infosys vs. Accenture plc | Infosys vs. International Business Machines | Infosys vs. Cognizant Technology Solutions | Infosys vs. AMADEUS IT GRP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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