Correlation Between Petroleo Brasileiro and LianDi Clean
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and LianDi Clean 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 LianDi Clean 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 LianDi Clean Technology, you can compare the effects of market volatilities on Petroleo Brasileiro and LianDi Clean 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 LianDi Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and LianDi Clean.
Diversification Opportunities for Petroleo Brasileiro and LianDi Clean
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petroleo and LianDi is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and LianDi Clean Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianDi Clean Technology 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 LianDi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianDi Clean Technology has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and LianDi Clean go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and LianDi Clean
If you would invest 1,379 in Petroleo Brasileiro Petrobras on August 28, 2024 and sell it today you would earn a total of 88.00 from holding Petroleo Brasileiro Petrobras or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. LianDi Clean Technology
Performance |
| Timeline |
| Petroleo Brasileiro |
| LianDi Clean Technology |
Petroleo Brasileiro and LianDi Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and LianDi Clean
The main advantage of trading using opposite Petroleo Brasileiro and LianDi Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, LianDi Clean 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 LianDi Clean will offset losses from the drop in LianDi Clean's long position.The idea behind Petroleo Brasileiro Petrobras and LianDi Clean Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LianDi Clean vs. Petroleo Brasileiro Petrobras | LianDi Clean vs. Equinor ASA ADR | LianDi Clean vs. Eni SpA ADR | LianDi Clean vs. YPF Sociedad Anonima |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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