Correlation Between Petroleo Brasileiro and Horizon Space

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

Diversification Opportunities for Petroleo Brasileiro and Horizon Space

-0.21

Correlation Coefficient

Petroleo Brasileiro  Horizon Space

Very good diversification

The 3 months correlation between Petroleo and Horizon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition 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 Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Horizon Space go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Horizon Space

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Horizon Space. In addition to that, Petroleo Brasileiro is 19.03 times more volatile than Horizon Space Acquisition. It trades about -0.09 of its total potential returns per unit of risk. Horizon Space Acquisition is currently generating about 0.08 per unit of volatility. If you would invest  1,000.00  in Horizon Space Acquisition on September 25, 2024 and sell it today you would earn a total of  2.00  from holding Horizon Space Acquisition or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Horizon Space Acquisition

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.

Horizon Space Acquisition

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Space Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Horizon Space is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Petroleo Brasileiro and Horizon Space

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

The idea behind Petroleo Brasileiro Petrobras and Horizon Space Acquisition 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.