Correlation Between AdvanSix and Braskem SA
Can any of the company-specific risk be diversified away by investing in both AdvanSix and Braskem SA 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 AdvanSix and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvanSix and Braskem SA Class, you can compare the effects of market volatilities on AdvanSix and Braskem SA 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 AdvanSix with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and Braskem SA.
Diversification Opportunities for AdvanSix and Braskem SA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AdvanSix and Braskem is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Braskem SA Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA Class and AdvanSix 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 AdvanSix are associated (or correlated) with Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA Class has no effect on the direction of AdvanSix i.e., AdvanSix and Braskem SA go up and down completely randomly.
Pair Corralation between AdvanSix and Braskem SA
Given the investment horizon of 90 days AdvanSix is expected to generate 0.97 times more return on investment than Braskem SA. However, AdvanSix is 1.04 times less risky than Braskem SA. It trades about 0.22 of its potential returns per unit of risk. Braskem SA Class is currently generating about 0.07 per unit of risk. If you would invest 2,827 in AdvanSix on October 20, 2024 and sell it today you would earn a total of 331.00 from holding AdvanSix or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvanSix vs. Braskem SA Class
Performance |
| Timeline |
| AdvanSix |
| Braskem SA Class |
AdvanSix and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvanSix and Braskem SA
The main advantage of trading using opposite AdvanSix and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvanSix position performs unexpectedly, Braskem SA 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 Braskem SA will offset losses from the drop in Braskem SA's long position.| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
| Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |