Correlation Between Petroleo Brasileiro and Sunwoda Electronic

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

Diversification Opportunities for Petroleo Brasileiro and Sunwoda Electronic

-0.44

Correlation Coefficient

Petroleo Brasileiro  Sunwoda Electronic

Very good diversification

The 3 months correlation between Petroleo and Sunwoda is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Sunwoda Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunwoda Electronic 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 Sunwoda Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunwoda Electronic has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Sunwoda Electronic go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Sunwoda Electronic

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Sunwoda Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 3.03 times less risky than Sunwoda Electronic. The stock trades about -0.08 of its potential returns per unit of risk. The Sunwoda Electronic is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,605  in Sunwoda Electronic on September 24, 2024 and sell it today you would earn a total of  720.00  from holding Sunwoda Electronic or generate 44.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Sunwoda Electronic

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.

Sunwoda Electronic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunwoda Electronic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sunwoda Electronic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petroleo Brasileiro and Sunwoda Electronic

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

The idea behind Petroleo Brasileiro Petrobras and Sunwoda Electronic 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.