Correlation Between Petro Rio and Schulz SA
Can any of the company-specific risk be diversified away by investing in both Petro Rio and Schulz 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 Petro Rio and Schulz SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petro Rio SA and Schulz SA, you can compare the effects of market volatilities on Petro Rio and Schulz 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 Petro Rio with a short position of Schulz SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Rio and Schulz SA.
Diversification Opportunities for Petro Rio and Schulz SA
Very weak diversification
The 3 months correlation between Petro and Schulz is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Petro Rio SA and Schulz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schulz SA and Petro Rio 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 Petro Rio SA are associated (or correlated) with Schulz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schulz SA has no effect on the direction of Petro Rio i.e., Petro Rio and Schulz SA go up and down completely randomly.
Pair Corralation between Petro Rio and Schulz SA
Assuming the 90 days trading horizon Petro Rio SA is expected to generate 1.13 times more return on investment than Schulz SA. However, Petro Rio is 1.13 times more volatile than Schulz SA. It trades about 0.19 of its potential returns per unit of risk. Schulz SA is currently generating about 0.02 per unit of risk. If you would invest 3,920 in Petro Rio SA on September 13, 2024 and sell it today you would earn a total of 279.00 from holding Petro Rio SA or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petro Rio SA vs. Schulz SA
Performance |
| Timeline |
| Petro Rio SA |
| Schulz SA |
Petro Rio and Schulz SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petro Rio and Schulz SA
The main advantage of trading using opposite Petro Rio and Schulz SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Rio position performs unexpectedly, Schulz 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 Schulz SA will offset losses from the drop in Schulz SA's long position.| Petro Rio vs. PDG Realty SA | Petro Rio vs. Positivo Tecnologia SA | Petro Rio vs. Rossi Residencial SA | Petro Rio vs. Gafisa SA |
| Schulz SA vs. PBG SA | Schulz SA vs. Movida Participaes SA | Schulz SA vs. Tupy SA | Schulz SA vs. Petro Rio SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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