Correlation Between Petroleo Brasileiro and Duc Thanh

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

Diversification Opportunities for Petroleo Brasileiro and Duc Thanh

-0.81

Correlation Coefficient

Petroleo Brasileiro  Duc Thanh

Pay attention - limited upside

The 3 months correlation between Petroleo and Duc is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood 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 Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Duc Thanh go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Duc Thanh

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 4.13 times less return on investment than Duc Thanh. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 1.2 times less risky than Duc Thanh. It trades about 0.01 of its potential returns per unit of risk. Duc Thanh Wood is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,604,546  in Duc Thanh Wood on September 13, 2024 and sell it today you would earn a total of  105,454  from holding Duc Thanh Wood or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Duc Thanh Wood

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Duc Thanh Wood

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Duc Thanh Wood are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Duc Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Duc Thanh

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

The idea behind Petroleo Brasileiro Petrobras and Duc Thanh Wood 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.