Correlation Between Petroleo Brasileiro and HEALTHCARE TRPFD

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

Diversification Opportunities for Petroleo Brasileiro and HEALTHCARE TRPFD

0.03

Correlation Coefficient

Petroleo Brasileiro  HEALTHCARE TRPFD

Significant diversification

The 3 months correlation between Petroleo and HEALTHCARE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and HEALTHCARE TRPFD SH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE TRPFD 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 HEALTHCARE TRPFD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE TRPFD has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and HEALTHCARE TRPFD go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and HEALTHCARE TRPFD

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.01 times more return on investment than HEALTHCARE TRPFD. However, Petroleo Brasileiro is 1.01 times more volatile than HEALTHCARE TRPFD SH. It trades about -0.2 of its potential returns per unit of risk. HEALTHCARE TRPFD SH is currently generating about -0.28 per unit of risk. If you would invest  1,412  in Petroleo Brasileiro Petrobras on September 27, 2024 and sell it today you would lose (109.00) from holding Petroleo Brasileiro Petrobras or give up 7.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  HEALTHCARE TRPFD SH

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.

HEALTHCARE TRPFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEALTHCARE TRPFD SH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HEALTHCARE TRPFD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Petroleo Brasileiro and HEALTHCARE TRPFD

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

The idea behind Petroleo Brasileiro Petrobras and HEALTHCARE TRPFD SH 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..