Correlation Between Petroleo Brasileiro and Springview Holdings

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

Diversification Opportunities for Petroleo Brasileiro and Springview Holdings

0.35

Correlation Coefficient

Petroleo Brasileiro  Springview Holdings

Weak diversification

The 3 months correlation between Petroleo and Springview is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Springview Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Springview Holdings 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 Springview Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Springview Holdings has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Springview Holdings go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Springview Holdings

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Springview Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 87.3 times less risky than Springview Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Springview Holdings Ltd is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Springview Holdings Ltd on September 23, 2024 and sell it today you would earn a total of  574.00  from holding Springview Holdings Ltd or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.85%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Springview Holdings Ltd

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.

Springview Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Springview Holdings Ltd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical indicators, Springview Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Springview Holdings

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

The idea behind Petroleo Brasileiro Petrobras and Springview Holdings Ltd 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.