Correlation Between Petroleo Brasileiro and Keck Seng

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Keck Seng 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 Keck Seng 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 Keck Seng Malaysia, you can compare the effects of market volatilities on Petroleo Brasileiro and Keck Seng 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 Keck Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Keck Seng.

Diversification Opportunities for Petroleo Brasileiro and Keck Seng

0.6

Correlation Coefficient

Petroleo Brasileiro  Keck Seng

Poor diversification

The 3 months correlation between Petroleo and Keck is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Keck Seng Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Malaysia 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 Keck Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keck Seng Malaysia has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Keck Seng go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Keck Seng

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Keck Seng. In addition to that, Petroleo Brasileiro is 1.64 times more volatile than Keck Seng Malaysia. It trades about 0.0 of its total potential returns per unit of risk. Keck Seng Malaysia is currently generating about 0.06 per unit of volatility. If you would invest  482.00  in Keck Seng Malaysia on September 25, 2024 and sell it today you would earn a total of  82.00  from holding Keck Seng Malaysia or generate 17.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.98%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Keck Seng Malaysia

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Keck Seng Malaysia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keck Seng Malaysia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Keck Seng is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Petroleo Brasileiro and Keck Seng

The main advantage of trading using opposite Petroleo Brasileiro and Keck Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Keck Seng 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 Keck Seng will offset losses from the drop in Keck Seng's long position.

The idea behind Petroleo Brasileiro Petrobras and Keck Seng Malaysia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.