Correlation Between Braskem SA and Mitsubishi Chemical
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Mitsubishi Chemical 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 Mitsubishi Chemical 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 Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on Braskem SA and Mitsubishi Chemical 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 Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Mitsubishi Chemical.
Diversification Opportunities for Braskem SA and Mitsubishi Chemical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Braskem and Mitsubishi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical 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 Mitsubishi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Chemical has no effect on the direction of Braskem SA i.e., Braskem SA and Mitsubishi Chemical go up and down completely randomly.
Pair Corralation between Braskem SA and Mitsubishi Chemical
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Mitsubishi Chemical. In addition to that, Braskem SA is 1.37 times more volatile than Mitsubishi Chemical Holdings. It trades about -0.04 of its total potential returns per unit of risk. Mitsubishi Chemical Holdings is currently generating about 0.0 per unit of volatility. If you would invest 2,894 in Mitsubishi Chemical Holdings on August 31, 2024 and sell it today you would lose (168.00) from holding Mitsubishi Chemical Holdings or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA Class vs. Mitsubishi Chemical Holdings
Performance |
| Timeline |
| Braskem SA Class |
| Mitsubishi Chemical |
Braskem SA and Mitsubishi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Mitsubishi Chemical
The main advantage of trading using opposite Braskem SA and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Mitsubishi Chemical 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 Mitsubishi Chemical will offset losses from the drop in Mitsubishi Chemical's long position.| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Tronox Holdings PLC | Braskem SA vs. Celanese |
| Mitsubishi Chemical vs. Sumitomo Chemical Co | Mitsubishi Chemical vs. Asahi Kaisei Corp | Mitsubishi Chemical vs. Nitto Denko Corp | Mitsubishi Chemical vs. Shin Etsu Chemical Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |