Correlation Between Petroleo Brasileiro and Industria
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Industria 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 Industria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro SA and Industria de Diseno, you can compare the effects of market volatilities on Petroleo Brasileiro and Industria 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 Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Industria.
Diversification Opportunities for Petroleo Brasileiro and Industria
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Industria is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro SA and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno 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 SA are associated (or correlated) with Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Industria go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Industria
Assuming the 90 days trading horizon Petroleo Brasileiro SA is expected to generate 92.47 times more return on investment than Industria. However, Petroleo Brasileiro is 92.47 times more volatile than Industria de Diseno. It trades about 0.13 of its potential returns per unit of risk. Industria de Diseno is currently generating about 0.13 per unit of risk. If you would invest 18.00 in Petroleo Brasileiro SA on August 28, 2024 and sell it today you would earn a total of 634.00 from holding Petroleo Brasileiro SA or generate 3522.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.48% |
| Values | Daily Returns |
Petroleo Brasileiro SA vs. Industria de Diseno
Performance |
| Timeline |
| Petroleo Brasileiro |
| Industria de Diseno |
Petroleo Brasileiro and Industria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Industria
The main advantage of trading using opposite Petroleo Brasileiro and Industria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Industria 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 Industria will offset losses from the drop in Industria's long position.| Petroleo Brasileiro vs. Repsol | Petroleo Brasileiro vs. Metrovacesa SA | Petroleo Brasileiro vs. Elecnor SA | Petroleo Brasileiro vs. Mapfre |
| Industria vs. Iberdrola SA | Industria vs. Repsol | Industria vs. Banco Santander | Industria vs. ACS Actividades de |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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