Correlation Between Petroleo Brasileiro and H D
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and H D 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 H D 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 H D International Holdings, you can compare the effects of market volatilities on Petroleo Brasileiro and H D 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 H D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and H D.
Diversification Opportunities for Petroleo Brasileiro and H D
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and HDIH is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and H D International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H D International 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 H D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H D International has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and H D go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and H D
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.34 times more return on investment than H D. However, Petroleo Brasileiro Petrobras is 2.98 times less risky than H D. It trades about 0.08 of its potential returns per unit of risk. H D International Holdings is currently generating about 0.01 per unit of risk. If you would invest 642.00 in Petroleo Brasileiro Petrobras on September 21, 2024 and sell it today you would earn a total of 653.00 from holding Petroleo Brasileiro Petrobras or generate 101.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. H D International Holdings
Performance |
Timeline |
Petroleo Brasileiro |
H D International |
Petroleo Brasileiro and H D Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and H D
The main advantage of trading using opposite Petroleo Brasileiro and H D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, H D 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 H D will offset losses from the drop in H D's long position.Petroleo Brasileiro vs. Ecopetrol SA ADR | ||
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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