Correlation Between Braskem SA and Royal Gold
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Royal Gold 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 Royal Gold 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 Royal Gold, you can compare the effects of market volatilities on Braskem SA and Royal Gold 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 Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Royal Gold.
Diversification Opportunities for Braskem SA and Royal Gold
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Braskem and Royal is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold 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 Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of Braskem SA i.e., Braskem SA and Royal Gold go up and down completely randomly.
Pair Corralation between Braskem SA and Royal Gold
Considering the 90-day investment horizon Braskem SA Class is expected to generate 3.71 times more return on investment than Royal Gold. However, Braskem SA is 3.71 times more volatile than Royal Gold. It trades about 0.25 of its potential returns per unit of risk. Royal Gold is currently generating about 0.31 per unit of risk. If you would invest 386.00 in Braskem SA Class on November 1, 2024 and sell it today you would earn a total of 88.00 from holding Braskem SA Class or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA Class vs. Royal Gold
Performance |
| Timeline |
| Braskem SA Class |
| Royal Gold |
Braskem SA and Royal Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Royal Gold
The main advantage of trading using opposite Braskem SA and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Royal Gold 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 Royal Gold will offset losses from the drop in Royal Gold's long position.| Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
| Royal Gold vs. Wheaton Precious Metals | Royal Gold vs. Agnico Eagle Mines | Royal Gold vs. Sandstorm Gold Ltd | Royal Gold vs. Osisko Gold Ro |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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