Correlation Between Petroleo Brasileiro and DANANG HOUSING

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

Diversification Opportunities for Petroleo Brasileiro and DANANG HOUSING

0.08

Correlation Coefficient

Petroleo Brasileiro  DANANG HOUSING

Significant diversification

The 3 months correlation between Petroleo and DANANG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and DANANG HOUSING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DANANG HOUSING 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 DANANG HOUSING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DANANG HOUSING has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and DANANG HOUSING go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and DANANG HOUSING

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.86 times more return on investment than DANANG HOUSING. However, Petroleo Brasileiro Petrobras is 1.16 times less risky than DANANG HOUSING. It trades about 0.07 of its potential returns per unit of risk. DANANG HOUSING is currently generating about 0.04 per unit of risk. If you would invest  668.00  in Petroleo Brasileiro Petrobras on September 29, 2024 and sell it today you would earn a total of  595.00  from holding Petroleo Brasileiro Petrobras or generate 89.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  DANANG HOUSING

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.

DANANG HOUSING

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DANANG HOUSING are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, DANANG HOUSING 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 DANANG HOUSING

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

The idea behind Petroleo Brasileiro Petrobras and DANANG HOUSING 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 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.