Correlation Between Petroleo Brasileiro and TGCC SA
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and TGCC SA 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 TGCC SA 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 TGCC SA, you can compare the effects of market volatilities on Petroleo Brasileiro and TGCC SA 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 TGCC SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and TGCC SA.
Diversification Opportunities for Petroleo Brasileiro and TGCC SA
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and TGCC is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and TGCC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGCC SA 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 TGCC SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGCC SA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and TGCC SA go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and TGCC SA
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 2.38 times less return on investment than TGCC SA. In addition to that, Petroleo Brasileiro is 1.26 times more volatile than TGCC SA. It trades about 0.07 of its total potential returns per unit of risk. TGCC SA is currently generating about 0.2 per unit of volatility. If you would invest 11,800 in TGCC SA on October 7, 2024 and sell it today you would earn a total of 41,200 from holding TGCC SA or generate 349.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. TGCC SA
Performance |
| Timeline |
| Petroleo Brasileiro |
| TGCC SA |
Petroleo Brasileiro and TGCC SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and TGCC SA
The main advantage of trading using opposite Petroleo Brasileiro and TGCC SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, TGCC SA 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 TGCC SA will offset losses from the drop in TGCC SA's long position.| Petroleo Brasileiro vs. Exxon Mobil Corp | Petroleo Brasileiro vs. Aquagold International | Petroleo Brasileiro vs. Alibaba Group Holding | Petroleo Brasileiro vs. Banco Bradesco SA |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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