Correlation Between Petroleo Brasileiro and Pakistan International
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Pakistan International 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 Pakistan International 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 Pakistan International Bulk, you can compare the effects of market volatilities on Petroleo Brasileiro and Pakistan International 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 Pakistan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Pakistan International.
Diversification Opportunities for Petroleo Brasileiro and Pakistan International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and Pakistan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Pakistan International Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan International 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 Pakistan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan International has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Pakistan International go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Pakistan International
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.31 times more return on investment than Pakistan International. However, Petroleo Brasileiro Petrobras is 3.23 times less risky than Pakistan International. It trades about 0.46 of its potential returns per unit of risk. Pakistan International Bulk is currently generating about 0.01 per unit of risk. If you would invest 1,247 in Petroleo Brasileiro Petrobras on October 22, 2024 and sell it today you would earn a total of 125.00 from holding Petroleo Brasileiro Petrobras or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Pakistan International Bulk
Performance |
| Timeline |
| Petroleo Brasileiro |
| Pakistan International |
Petroleo Brasileiro and Pakistan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Pakistan International
The main advantage of trading using opposite Petroleo Brasileiro and Pakistan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Pakistan International 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 Pakistan International will offset losses from the drop in Pakistan International'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 |
| Pakistan International vs. Shaheen Insurance | Pakistan International vs. Pakistan Reinsurance | Pakistan International vs. Askari General Insurance | Pakistan International vs. IGI Life Insurance |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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