Correlation Between Braskem SA and Olin
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Olin 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 Olin 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 Olin Corporation, you can compare the effects of market volatilities on Braskem SA and Olin 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 Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Olin.
Diversification Opportunities for Braskem SA and Olin
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Braskem and Olin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin 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 Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Braskem SA i.e., Braskem SA and Olin go up and down completely randomly.
Pair Corralation between Braskem SA and Olin
Considering the 90-day investment horizon Braskem SA Class is expected to generate 1.08 times more return on investment than Olin. However, Braskem SA is 1.08 times more volatile than Olin Corporation. It trades about -0.11 of its potential returns per unit of risk. Olin Corporation is currently generating about -0.26 per unit of risk. If you would invest 545.00 in Braskem SA Class on September 12, 2024 and sell it today you would lose (37.00) from holding Braskem SA Class or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA Class vs. Olin Corp.
Performance |
| Timeline |
| Braskem SA Class |
| Olin |
Braskem SA and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Olin
The main advantage of trading using opposite Braskem SA and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.| Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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