Correlation Between Braskem SA and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Eastman Chemical 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 Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braskem SA and Eastman Chemical, you can compare the effects of market volatilities on Braskem SA and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Eastman Chemical.
Diversification Opportunities for Braskem SA and Eastman Chemical
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Braskem and Eastman is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Braskem SA i.e., Braskem SA and Eastman Chemical go up and down completely randomly.
Pair Corralation between Braskem SA and Eastman Chemical
Assuming the 90 days trading horizon Braskem SA is expected to under-perform the Eastman Chemical. In addition to that, Braskem SA is 32.88 times more volatile than Eastman Chemical. It trades about -0.27 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.24 per unit of volatility. If you would invest 27,365 in Eastman Chemical on October 12, 2024 and sell it today you would earn a total of 175.00 from holding Eastman Chemical or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA vs. Eastman Chemical
Performance |
| Timeline |
| Braskem SA |
| Eastman Chemical |
Braskem SA and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Eastman Chemical
The main advantage of trading using opposite Braskem SA and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Braskem SA vs. Braskem SA | Braskem SA vs. Braskem SA | Braskem SA vs. Bradespar SA | Braskem SA vs. Unipar Carbocloro SA |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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