Correlation Between Petroleo Brasileiro and H D

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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

PetroleoHDIHDiversified AwayPetroleoHDIHDiversified Away100%
-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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Petroleo Brasileiro Petrobras  vs.  H D International Holdings

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1001020304050
JavaScript chart by amCharts 3.21.15PBR HDIH
       Timeline  
Petroleo Brasileiro 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 unsteady 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec12.51313.51414.5
H D International 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in H D International Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, H D demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.00020.000220.000240.000260.000280.0003

Petroleo Brasileiro and H D Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.73-2.04-1.36-0.670.00.641.281.922.56 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15PBR HDIH
       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.
The idea behind Petroleo Brasileiro Petrobras and H D International Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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