Correlation Between Petroleo Brasileiro and Petrus Resources
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Petrus Resources 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 Petrus Resources 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 Petrus Resources, you can compare the effects of market volatilities on Petroleo Brasileiro and Petrus Resources 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 Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Petrus Resources.
Diversification Opportunities for Petroleo Brasileiro and Petrus Resources
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Petrus is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources 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 Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Petrus Resources go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Petrus Resources
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.92 times more return on investment than Petrus Resources. However, Petroleo Brasileiro Petrobras is 1.09 times less risky than Petrus Resources. It trades about 0.02 of its potential returns per unit of risk. Petrus Resources is currently generating about 0.01 per unit of risk. If you would invest 1,458 in Petroleo Brasileiro Petrobras on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Petroleo Brasileiro Petrobras or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Petrus Resources
Performance |
| Timeline |
| Petroleo Brasileiro |
| Petrus Resources |
Petroleo Brasileiro and Petrus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Petrus Resources
The main advantage of trading using opposite Petroleo Brasileiro and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Petrus Resources 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.The idea behind Petroleo Brasileiro Petrobras and Petrus Resources 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.| Petrus Resources vs. Petroleo Brasileiro Petrobras | Petrus Resources vs. Equinor ASA ADR | Petrus Resources vs. Eni SpA ADR | Petrus Resources 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |