Correlation Between Braskem SA and NanoXplore
Can any of the company-specific risk be diversified away by investing in both Braskem SA and NanoXplore 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 NanoXplore 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 NanoXplore, you can compare the effects of market volatilities on Braskem SA and NanoXplore 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 NanoXplore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and NanoXplore.
Diversification Opportunities for Braskem SA and NanoXplore
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Braskem and NanoXplore is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and NanoXplore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoXplore 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 NanoXplore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoXplore has no effect on the direction of Braskem SA i.e., Braskem SA and NanoXplore go up and down completely randomly.
Pair Corralation between Braskem SA and NanoXplore
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the NanoXplore. In addition to that, Braskem SA is 1.15 times more volatile than NanoXplore. It trades about -0.32 of its total potential returns per unit of risk. NanoXplore is currently generating about -0.21 per unit of volatility. If you would invest 179.00 in NanoXplore on August 31, 2024 and sell it today you would lose (18.00) from holding NanoXplore or give up 10.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA Class vs. NanoXplore
Performance |
| Timeline |
| Braskem SA Class |
| NanoXplore |
Braskem SA and NanoXplore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and NanoXplore
The main advantage of trading using opposite Braskem SA and NanoXplore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, NanoXplore 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 NanoXplore will offset losses from the drop in NanoXplore's long position.| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Tronox Holdings PLC | Braskem SA vs. Celanese |
| NanoXplore vs. BASF SE NA | NanoXplore vs. Braskem SA Class | NanoXplore vs. Lsb Industries | NanoXplore vs. Dow Inc |
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.
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