Correlation Between Petroleo Brasileiro and Xinjiang Goldwind

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

Diversification Opportunities for Petroleo Brasileiro and Xinjiang Goldwind

-0.63

Correlation Coefficient

Petroleo Brasileiro  Xinjiang Goldwind

Excellent diversification

The 3 months correlation between Petroleo and Xinjiang is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science 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 Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Xinjiang Goldwind go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Xinjiang Goldwind

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Xinjiang Goldwind. In addition to that, Petroleo Brasileiro is 1.53 times more volatile than Xinjiang Goldwind Science. It trades about -0.2 of its total potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about -0.11 per unit of volatility. If you would invest  931.00  in Xinjiang Goldwind Science on December 10, 2024 and sell it today you would lose (30.00) from holding Xinjiang Goldwind Science or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Xinjiang Goldwind Science

Petroleo Brasileiro

Risk-Adjusted Performance

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.

Xinjiang Goldwind Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinjiang Goldwind Science has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Petroleo Brasileiro and Xinjiang Goldwind

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

The idea behind Petroleo Brasileiro Petrobras and Xinjiang Goldwind Science 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.