Correlation Between Refinaria and Telecomunicaes Brasileiras
Can any of the company-specific risk be diversified away by investing in both Refinaria and Telecomunicaes Brasileiras 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 Refinaria and Telecomunicaes Brasileiras into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Refinaria de Petrleos and Telecomunicaes Brasileiras SA, you can compare the effects of market volatilities on Refinaria and Telecomunicaes Brasileiras 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 Refinaria with a short position of Telecomunicaes Brasileiras. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refinaria and Telecomunicaes Brasileiras.
Diversification Opportunities for Refinaria and Telecomunicaes Brasileiras
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Refinaria and Telecomunicaes is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Telecomunicaes Brasileiras SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecomunicaes Brasileiras and Refinaria 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 Refinaria de Petrleos are associated (or correlated) with Telecomunicaes Brasileiras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecomunicaes Brasileiras has no effect on the direction of Refinaria i.e., Refinaria and Telecomunicaes Brasileiras go up and down completely randomly.
Pair Corralation between Refinaria and Telecomunicaes Brasileiras
Assuming the 90 days trading horizon Refinaria de Petrleos is expected to generate 1.56 times more return on investment than Telecomunicaes Brasileiras. However, Refinaria is 1.56 times more volatile than Telecomunicaes Brasileiras SA. It trades about -0.11 of its potential returns per unit of risk. Telecomunicaes Brasileiras SA is currently generating about -0.27 per unit of risk. If you would invest 295.00 in Refinaria de Petrleos on September 2, 2024 and sell it today you would lose (26.00) from holding Refinaria de Petrleos or give up 8.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Refinaria de Petrleos vs. Telecomunicaes Brasileiras SA
Performance |
| Timeline |
| Refinaria de Petrleos |
| Telecomunicaes Brasileiras |
Refinaria and Telecomunicaes Brasileiras Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Refinaria and Telecomunicaes Brasileiras
The main advantage of trading using opposite Refinaria and Telecomunicaes Brasileiras positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refinaria position performs unexpectedly, Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras will offset losses from the drop in Telecomunicaes Brasileiras' long position.| Refinaria vs. Lupatech SA | Refinaria vs. Recrusul SA | Refinaria vs. PDG Realty SA | Refinaria vs. OSX Brasil 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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