Correlation Between Petro Rio and SIMPAR SA
Can any of the company-specific risk be diversified away by investing in both Petro Rio and SIMPAR 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 SIMPAR 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 SIMPAR SA, you can compare the effects of market volatilities on Petro Rio and SIMPAR 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 SIMPAR SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Rio and SIMPAR SA.
Diversification Opportunities for Petro Rio and SIMPAR SA
Very weak diversification
The 3 months correlation between Petro and SIMPAR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Petro Rio SA and SIMPAR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMPAR 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 SIMPAR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMPAR SA has no effect on the direction of Petro Rio i.e., Petro Rio and SIMPAR SA go up and down completely randomly.
Pair Corralation between Petro Rio and SIMPAR SA
Assuming the 90 days trading horizon Petro Rio SA is expected to under-perform the SIMPAR SA. But the stock apears to be less risky and, when comparing its historical volatility, Petro Rio SA is 2.19 times less risky than SIMPAR SA. The stock trades about -0.08 of its potential returns per unit of risk. The SIMPAR SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 544.00 in SIMPAR SA on August 28, 2024 and sell it today you would earn a total of 18.00 from holding SIMPAR SA or generate 3.31% 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. SIMPAR SA
Performance |
| Timeline |
| Petro Rio SA |
| SIMPAR SA |
Petro Rio and SIMPAR SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petro Rio and SIMPAR SA
The main advantage of trading using opposite Petro Rio and SIMPAR SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Rio position performs unexpectedly, SIMPAR 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 SIMPAR SA will offset losses from the drop in SIMPAR SA's long position.| Petro Rio vs. Apartment Investment and | Petro Rio vs. Align Technology | Petro Rio vs. Unity Software | Petro Rio vs. Fidelity National Information |
| SIMPAR SA vs. Ambipar Participaes e | SIMPAR SA vs. Vamos Locao de | SIMPAR SA vs. Movida Participaes SA | SIMPAR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |