Correlation Between Braskem SA and BZAM
Can any of the company-specific risk be diversified away by investing in both Braskem SA and BZAM 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 BZAM 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 BZAM, you can compare the effects of market volatilities on Braskem SA and BZAM 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 BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and BZAM.
Diversification Opportunities for Braskem SA and BZAM
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Braskem and BZAM is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM 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 BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Braskem SA i.e., Braskem SA and BZAM go up and down completely randomly.
Pair Corralation between Braskem SA and BZAM
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the BZAM. But the stock apears to be less risky and, when comparing its historical volatility, Braskem SA Class is 66.34 times less risky than BZAM. The stock trades about -0.13 of its potential returns per unit of risk. The BZAM is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.50 in BZAM on September 3, 2024 and sell it today you would lose (2.50) from holding BZAM or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Braskem SA Class vs. BZAM
Performance |
| Timeline |
| Braskem SA Class |
| BZAM |
Braskem SA and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and BZAM
The main advantage of trading using opposite Braskem SA and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.| Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
| BZAM vs. Axalta Coating Systems | BZAM vs. Corporacion America Airports | BZAM vs. Sensient Technologies | BZAM vs. EvoAir Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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