Correlation Between Braskem SA and First Graphene
Can any of the company-specific risk be diversified away by investing in both Braskem SA and First Graphene 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 First Graphene 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 First Graphene, you can compare the effects of market volatilities on Braskem SA and First Graphene 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 First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and First Graphene.
Diversification Opportunities for Braskem SA and First Graphene
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Braskem and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene 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 First Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Graphene has no effect on the direction of Braskem SA i.e., Braskem SA and First Graphene go up and down completely randomly.
Pair Corralation between Braskem SA and First Graphene
Considering the 90-day investment horizon Braskem SA Class is expected to generate 0.26 times more return on investment than First Graphene. However, Braskem SA Class is 3.83 times less risky than First Graphene. It trades about -0.3 of its potential returns per unit of risk. First Graphene is currently generating about -0.11 per unit of risk. If you would invest 632.00 in Braskem SA Class on August 28, 2024 and sell it today you would lose (99.00) from holding Braskem SA Class or give up 15.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Braskem SA Class vs. First Graphene
Performance |
| Timeline |
| Braskem SA Class |
| First Graphene |
Braskem SA and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and First Graphene
The main advantage of trading using opposite Braskem SA and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, First Graphene 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 First Graphene will offset losses from the drop in First Graphene's long position.| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Celanese | Braskem SA vs. Green Plains Renewable |
| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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