Correlation Between Petroleo Brasileiro and Long An

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

Diversification Opportunities for Petroleo Brasileiro and Long An

-0.72

Correlation Coefficient

Petroleo Brasileiro  Long An

Pay attention - limited upside

The 3 months correlation between Petroleo and Long is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Long An Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long An Food 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 Long An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long An Food has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Long An go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Long An

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Long An. In addition to that, Petroleo Brasileiro is 1.05 times more volatile than Long An Food. It trades about -0.03 of its total potential returns per unit of risk. Long An Food is currently generating about 0.02 per unit of volatility. If you would invest  1,745,000  in Long An Food on September 15, 2024 and sell it today you would earn a total of  15,000  from holding Long An Food or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Long An Food

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 relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Long An Food

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Long An Food are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Long An is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Long An

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

The idea behind Petroleo Brasileiro Petrobras and Long An Food 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.