Correlation Between Braskem SA and Nucor Corp
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Nucor Corp 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 Nucor Corp 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 Nucor Corp, you can compare the effects of market volatilities on Braskem SA and Nucor Corp 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 Nucor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Nucor Corp.
Diversification Opportunities for Braskem SA and Nucor Corp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Braskem and Nucor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Nucor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor Corp 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 Nucor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor Corp has no effect on the direction of Braskem SA i.e., Braskem SA and Nucor Corp go up and down completely randomly.
Pair Corralation between Braskem SA and Nucor Corp
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Nucor Corp. In addition to that, Braskem SA is 1.67 times more volatile than Nucor Corp. It trades about -0.01 of its total potential returns per unit of risk. Nucor Corp is currently generating about -0.01 per unit of volatility. If you would invest 15,910 in Nucor Corp on November 9, 2024 and sell it today you would lose (2,590) from holding Nucor Corp or give up 16.28% 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. Nucor Corp
Performance |
| Timeline |
| Braskem SA Class |
| Nucor Corp |
Braskem SA and Nucor Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Nucor Corp
The main advantage of trading using opposite Braskem SA and Nucor Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Nucor Corp 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 Nucor Corp will offset losses from the drop in Nucor Corp's long position.| Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
| Nucor Corp vs. United States Steel | Nucor Corp vs. Reliance Steel Aluminum | Nucor Corp vs. ArcelorMittal SA ADR | Nucor Corp vs. Commercial Metals |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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