Correlation Between Petroleo Brasileiro and Sieyuan Electric

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

Diversification Opportunities for Petroleo Brasileiro and Sieyuan Electric

-0.61

Correlation Coefficient

Petroleo Brasileiro  Sieyuan Electric

Excellent diversification

The 3 months correlation between Petroleo and Sieyuan is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Sieyuan Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sieyuan Electric 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 Sieyuan Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sieyuan Electric has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Sieyuan Electric go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Sieyuan Electric

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.07 times less return on investment than Sieyuan Electric. In addition to that, Petroleo Brasileiro is 1.12 times more volatile than Sieyuan Electric Co. It trades about 0.07 of its total potential returns per unit of risk. Sieyuan Electric Co is currently generating about 0.08 per unit of volatility. If you would invest  3,775  in Sieyuan Electric Co on September 20, 2024 and sell it today you would earn a total of  3,395  from holding Sieyuan Electric Co or generate 89.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.97%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Sieyuan Electric Co

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 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.

Sieyuan Electric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sieyuan Electric Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sieyuan Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Sieyuan Electric

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

The idea behind Petroleo Brasileiro Petrobras and Sieyuan Electric Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.