Correlation Between Petroleo Brasileiro and Widodo Makmur

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

Diversification Opportunities for Petroleo Brasileiro and Widodo Makmur

0.11

Correlation Coefficient

Petroleo Brasileiro  Widodo Makmur

Average diversification

The 3 months correlation between Petroleo and Widodo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Widodo Makmur Unggas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widodo Makmur Unggas 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 Widodo Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widodo Makmur Unggas has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Widodo Makmur go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Widodo Makmur

Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 5.33 times less return on investment than Widodo Makmur. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 3.65 times less risky than Widodo Makmur. It trades about 0.02 of its potential returns per unit of risk. Widodo Makmur Unggas is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Widodo Makmur Unggas on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Widodo Makmur Unggas or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Widodo Makmur Unggas

Petroleo Brasileiro

Risk-Adjusted Performance

1 of 100

Very 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.

Widodo Makmur Unggas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Widodo Makmur Unggas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Widodo Makmur may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petroleo Brasileiro and Widodo Makmur

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

The idea behind Petroleo Brasileiro Petrobras and Widodo Makmur Unggas 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.