Correlation Between Bradespar and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Bradespar and Braskem SA 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 Bradespar and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bradespar SA and Braskem SA, you can compare the effects of market volatilities on Bradespar and Braskem SA 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 Bradespar with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bradespar and Braskem SA.
Diversification Opportunities for Bradespar and Braskem SA
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bradespar and Braskem is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bradespar SA and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Bradespar 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 Bradespar SA are associated (or correlated) with Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA has no effect on the direction of Bradespar i.e., Bradespar and Braskem SA go up and down completely randomly.
Pair Corralation between Bradespar and Braskem SA
Assuming the 90 days trading horizon Bradespar SA is expected to generate 0.58 times more return on investment than Braskem SA. However, Bradespar SA is 1.73 times less risky than Braskem SA. It trades about -0.17 of its potential returns per unit of risk. Braskem SA is currently generating about -0.25 per unit of risk. If you would invest 1,741 in Bradespar SA on August 27, 2024 and sell it today you would lose (74.00) from holding Bradespar SA or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bradespar SA vs. Braskem SA
Performance |
| Timeline |
| Bradespar SA |
| Braskem SA |
Bradespar and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bradespar and Braskem SA
The main advantage of trading using opposite Bradespar and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bradespar position performs unexpectedly, Braskem SA 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 Braskem SA will offset losses from the drop in Braskem SA's long position.| Bradespar vs. Bradespar SA | Bradespar vs. Metalurgica Gerdau SA | Bradespar vs. Banco Bradesco SA | Bradespar vs. Companhia Paranaense de |
| Braskem SA vs. Braskem SA | Braskem SA vs. Braskem SA | Braskem SA vs. Unipar Carbocloro SA | Braskem SA vs. Tronox Pigmentos do |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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