Correlation Between Petroleo Brasileiro and Tekla Healthcare

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

Diversification Opportunities for Petroleo Brasileiro and Tekla Healthcare

0.58

Correlation Coefficient

Petroleo Brasileiro  Tekla Healthcare

Very weak diversification

The 3 months correlation between Petroleo and Tekla is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv 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 Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Inv has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Tekla Healthcare

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Tekla Healthcare. In addition to that, Petroleo Brasileiro is 1.65 times more volatile than Tekla Healthcare Investors. It trades about -0.22 of its total potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.12 per unit of volatility. If you would invest  1,948  in Tekla Healthcare Investors on December 4, 2024 and sell it today you would lose (61.00) from holding Tekla Healthcare Investors or give up 3.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Tekla Healthcare Investors

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 2 (%) 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.

Tekla Healthcare Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tekla Healthcare Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Tekla Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Tekla Healthcare

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

The idea behind Petroleo Brasileiro Petrobras and Tekla Healthcare Investors 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.