Correlation Between Braskem SA and BASF SE
Can any of the company-specific risk be diversified away by investing in both Braskem SA and BASF SE 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 BASF SE 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 BASF SE ADR, you can compare the effects of market volatilities on Braskem SA and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and BASF SE.
Diversification Opportunities for Braskem SA and BASF SE
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Braskem and BASF is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and BASF SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE ADR 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE ADR has no effect on the direction of Braskem SA i.e., Braskem SA and BASF SE go up and down completely randomly.
Pair Corralation between Braskem SA and BASF SE
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the BASF SE. In addition to that, Braskem SA is 1.16 times more volatile than BASF SE ADR. It trades about -0.3 of its total potential returns per unit of risk. BASF SE ADR is currently generating about -0.23 per unit of volatility. If you would invest 1,238 in BASF SE ADR on August 28, 2024 and sell it today you would lose (127.00) from holding BASF SE ADR or give up 10.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Braskem SA Class vs. BASF SE ADR
Performance |
| Timeline |
| Braskem SA Class |
| BASF SE ADR |
Braskem SA and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and BASF SE
The main advantage of trading using opposite Braskem SA and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Celanese | Braskem SA vs. Green Plains Renewable |
| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. First Graphene | BASF SE vs. Huntsman |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |