Correlation Between Petroleo Brasileiro and Suntex Enterprises
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Suntex Enterprises 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 Suntex Enterprises 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 Suntex Enterprises, you can compare the effects of market volatilities on Petroleo Brasileiro and Suntex Enterprises 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 Suntex Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Suntex Enterprises.
Diversification Opportunities for Petroleo Brasileiro and Suntex Enterprises
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and Suntex is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Suntex Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntex Enterprises 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 Suntex Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntex Enterprises has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Suntex Enterprises go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Suntex Enterprises
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Suntex Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 4.37 times less risky than Suntex Enterprises. The stock trades about -0.12 of its potential returns per unit of risk. The Suntex Enterprises is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.16 in Suntex Enterprises on September 21, 2024 and sell it today you would earn a total of 0.03 from holding Suntex Enterprises or generate 18.75% 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. Suntex Enterprises
Performance |
| Timeline |
| Petroleo Brasileiro |
| Suntex Enterprises |
Petroleo Brasileiro and Suntex Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Suntex Enterprises
The main advantage of trading using opposite Petroleo Brasileiro and Suntex Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Suntex Enterprises 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 Suntex Enterprises will offset losses from the drop in Suntex Enterprises' 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 |
| Suntex Enterprises vs. Nuveen Global High | Suntex Enterprises vs. New America High | Suntex Enterprises vs. Brookfield Business Corp | Suntex Enterprises vs. DWS Municipal Income |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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