Correlation Between Petroleo Brasileiro and DIH Holdings

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

Diversification Opportunities for Petroleo Brasileiro and DIH Holdings

-0.18

Correlation Coefficient

Petroleo Brasileiro  DIH Holdings

Good diversification

The 3 months correlation between Petroleo and DIH is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and DIH Holdings US, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIH Holdings US, 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 DIH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIH Holdings US, has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and DIH Holdings go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and DIH Holdings

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.12 times more return on investment than DIH Holdings. However, Petroleo Brasileiro Petrobras is 8.65 times less risky than DIH Holdings. It trades about 0.12 of its potential returns per unit of risk. DIH Holdings US, is currently generating about -0.08 per unit of risk. If you would invest  1,258  in Petroleo Brasileiro Petrobras on December 20, 2024 and sell it today you would earn a total of  145.00  from holding Petroleo Brasileiro Petrobras or generate 11.53% return on investment over 90 days.

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

Petroleo Brasileiro Petrobras  vs.  DIH Holdings US,

Petroleo Brasileiro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Petroleo Brasileiro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

DIH Holdings US,

Risk-Adjusted Performance

Very Weak

Over the last 90 days DIH Holdings US, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Petroleo Brasileiro and DIH Holdings

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

The idea behind Petroleo Brasileiro Petrobras and DIH Holdings US, 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.