Correlation Between Braskem SA and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Analog Devices 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 Braskem SA and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braskem SA Class and Analog Devices, you can compare the effects of market volatilities on Braskem SA and Analog Devices 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 Braskem SA with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Analog Devices.
Diversification Opportunities for Braskem SA and Analog Devices
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Braskem and Analog is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Braskem SA 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 Braskem SA Class are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Braskem SA i.e., Braskem SA and Analog Devices go up and down completely randomly.
Pair Corralation between Braskem SA and Analog Devices
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Analog Devices. In addition to that, Braskem SA is 1.19 times more volatile than Analog Devices. It trades about -0.34 of its total potential returns per unit of risk. Analog Devices is currently generating about -0.1 per unit of volatility. If you would invest 23,014 in Analog Devices on August 29, 2024 and sell it today you would lose (1,109) from holding Analog Devices or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA Class vs. Analog Devices
Performance |
| Timeline |
| Braskem SA Class |
| Analog Devices |
Braskem SA and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Analog Devices
The main advantage of trading using opposite Braskem SA and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Celanese | Braskem SA vs. Green Plains Renewable |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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