Correlation Between Petroleo Brasileiro and YuantaP Shares

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

Diversification Opportunities for Petroleo Brasileiro and YuantaP Shares

-0.07

Correlation Coefficient

Petroleo Brasileiro  YuantaP Shares

Good diversification

The 3 months correlation between Petroleo and YuantaP is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and YuantaP shares MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares MSCI 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 YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares MSCI has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and YuantaP Shares go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and YuantaP Shares

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the YuantaP Shares. In addition to that, Petroleo Brasileiro is 1.76 times more volatile than YuantaP shares MSCI Taiwan. It trades about -0.04 of its total potential returns per unit of risk. YuantaP shares MSCI Taiwan is currently generating about 0.01 per unit of volatility. If you would invest  2,860  in YuantaP shares MSCI Taiwan on September 16, 2024 and sell it today you would earn a total of  9.00  from holding YuantaP shares MSCI Taiwan or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  YuantaP shares MSCI Taiwan

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.

YuantaP shares MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YuantaP shares MSCI Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, YuantaP Shares is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Petroleo Brasileiro and YuantaP Shares

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

The idea behind Petroleo Brasileiro Petrobras and YuantaP shares MSCI Taiwan 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.