Correlation Between Awilco Drilling and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling 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 Awilco Drilling and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco Drilling PLC and Braskem SA Class, you can compare the effects of market volatilities on Awilco Drilling 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 Awilco Drilling with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Braskem SA.
Diversification Opportunities for Awilco Drilling and Braskem SA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Awilco and Braskem is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC 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 Awilco Drilling 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 Awilco Drilling PLC 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 Awilco Drilling i.e., Awilco Drilling and Braskem SA go up and down completely randomly.
Pair Corralation between Awilco Drilling and Braskem SA
Assuming the 90 days horizon Awilco Drilling PLC is expected to generate 0.21 times more return on investment than Braskem SA. However, Awilco Drilling PLC is 4.8 times less risky than Braskem SA. It trades about -0.21 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.34 per unit of risk. If you would invest 197.00 in Awilco Drilling PLC on September 1, 2024 and sell it today you would lose (5.00) from holding Awilco Drilling PLC or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Awilco Drilling PLC vs. Braskem SA Class
Performance |
| Timeline |
| Awilco Drilling PLC |
| Braskem SA Class |
Awilco Drilling and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco Drilling and Braskem SA
The main advantage of trading using opposite Awilco Drilling and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling 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.| Awilco Drilling vs. Seadrill Limited | Awilco Drilling vs. Nabors Industries | Awilco Drilling vs. Borr Drilling | Awilco Drilling vs. Patterson UTI Energy |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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