Correlation Between Axalta Coating and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Axalta Coating 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 Axalta Coating and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Braskem SA Class, you can compare the effects of market volatilities on Axalta Coating 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 Axalta Coating with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Braskem SA.
Diversification Opportunities for Axalta Coating and Braskem SA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axalta and Braskem is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems 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 Axalta Coating 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 Axalta Coating Systems 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 Axalta Coating i.e., Axalta Coating and Braskem SA go up and down completely randomly.
Pair Corralation between Axalta Coating and Braskem SA
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.5 times more return on investment than Braskem SA. However, Axalta Coating Systems is 2.02 times less risky than Braskem SA. It trades about 0.04 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.01 per unit of risk. If you would invest 2,849 in Axalta Coating Systems on November 9, 2024 and sell it today you would earn a total of 956.00 from holding Axalta Coating Systems or generate 33.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Braskem SA Class
Performance |
| Timeline |
| Axalta Coating Systems |
| Braskem SA Class |
Axalta Coating and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Braskem SA
The main advantage of trading using opposite Axalta Coating and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating 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.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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