Correlation Between Braskem SA and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braskem SA and Vulcan Materials, you can compare the effects of market volatilities on Braskem SA and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Vulcan Materials.
Diversification Opportunities for Braskem SA and Vulcan Materials
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Braskem and Vulcan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Braskem SA i.e., Braskem SA and Vulcan Materials go up and down completely randomly.
Pair Corralation between Braskem SA and Vulcan Materials
Assuming the 90 days trading horizon Braskem SA is expected to generate 1.73 times more return on investment than Vulcan Materials. However, Braskem SA is 1.73 times more volatile than Vulcan Materials. It trades about 0.29 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.03 per unit of risk. If you would invest 1,179 in Braskem SA on October 25, 2024 and sell it today you would earn a total of 224.00 from holding Braskem SA or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA vs. Vulcan Materials
Performance |
| Timeline |
| Braskem SA |
| Vulcan Materials |
Braskem SA and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Vulcan Materials
The main advantage of trading using opposite Braskem SA and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Braskem SA vs. Companhia Siderrgica Nacional | Braskem SA vs. Usinas Siderrgicas de | Braskem SA vs. Gerdau SA | Braskem SA vs. Companhia Energtica de |
| Vulcan Materials vs. Unifique Telecomunicaes SA | Vulcan Materials vs. Applied Materials, | Vulcan Materials vs. Datadog, | Vulcan Materials vs. Multilaser Industrial SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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