Correlation Between Petroleo Brasileiro and Radiant Utama

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

Diversification Opportunities for Petroleo Brasileiro and Radiant Utama

-0.5

Correlation Coefficient

Petroleo Brasileiro  Radiant Utama

Very good diversification

The 3 months correlation between Petroleo and Radiant is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Radiant Utama Interinsco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Utama Interinsco 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 Radiant Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Utama Interinsco has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Radiant Utama go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Radiant Utama

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.39 times more return on investment than Radiant Utama. However, Petroleo Brasileiro is 1.39 times more volatile than Radiant Utama Interinsco. It trades about 0.02 of its potential returns per unit of risk. Radiant Utama Interinsco is currently generating about -0.15 per unit of risk. If you would invest  1,315  in Petroleo Brasileiro Petrobras on December 3, 2024 and sell it today you would earn a total of  20.00  from holding Petroleo Brasileiro Petrobras or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Radiant Utama Interinsco

Petroleo Brasileiro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petroleo Brasileiro Petrobras are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Radiant Utama Interinsco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Radiant Utama Interinsco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Petroleo Brasileiro and Radiant Utama

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

The idea behind Petroleo Brasileiro Petrobras and Radiant Utama Interinsco 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 Commodity Directory module to find actively traded commodities issued by global exchanges.