Correlation Between Petroleo Brasileiro and Ben Thanh
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Ben Thanh 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 Ben Thanh 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 Ben Thanh Rubber, you can compare the effects of market volatilities on Petroleo Brasileiro and Ben Thanh 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 Ben Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Ben Thanh.
Diversification Opportunities for Petroleo Brasileiro and Ben Thanh
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and Ben is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Ben Thanh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ben Thanh Rubber 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 Ben Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ben Thanh Rubber has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Ben Thanh go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Ben Thanh
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.84 times more return on investment than Ben Thanh. However, Petroleo Brasileiro is 1.84 times more volatile than Ben Thanh Rubber. It trades about 0.14 of its potential returns per unit of risk. Ben Thanh Rubber is currently generating about 0.0 per unit of risk. If you would invest 1,261 in Petroleo Brasileiro Petrobras on December 27, 2024 and sell it today you would earn a total of 188.00 from holding Petroleo Brasileiro Petrobras or generate 14.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.44% |
Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Ben Thanh Rubber
Performance |
Timeline |
Petroleo Brasileiro |
Ben Thanh Rubber |
Petroleo Brasileiro and Ben Thanh Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petroleo Brasileiro and Ben Thanh
The main advantage of trading using opposite Petroleo Brasileiro and Ben Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Ben Thanh 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 Ben Thanh will offset losses from the drop in Ben Thanh's long position.Petroleo Brasileiro vs. BP PLC ADR | Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. Imperial Oil |
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Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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