Correlation Between CA Modas and Braskem SA
Can any of the company-specific risk be diversified away by investing in both CA Modas 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 CA Modas and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Modas SA and Braskem SA, you can compare the effects of market volatilities on CA Modas 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 CA Modas with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Modas and Braskem SA.
Diversification Opportunities for CA Modas and Braskem SA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CEAB3 and Braskem is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CA Modas SA and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and CA Modas 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 CA Modas 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 CA Modas i.e., CA Modas and Braskem SA go up and down completely randomly.
Pair Corralation between CA Modas and Braskem SA
Assuming the 90 days trading horizon CA Modas SA is expected to generate 6.37 times more return on investment than Braskem SA. However, CA Modas is 6.37 times more volatile than Braskem SA. It trades about -0.03 of its potential returns per unit of risk. Braskem SA is currently generating about -0.26 per unit of risk. If you would invest 931.00 in CA Modas SA on November 28, 2024 and sell it today you would lose (36.00) from holding CA Modas SA or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Modas SA vs. Braskem SA
Performance |
| Timeline |
| CA Modas SA |
| Braskem SA |
CA Modas and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Modas and Braskem SA
The main advantage of trading using opposite CA Modas and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Modas 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.| CA Modas vs. Marisa Lojas SA | CA Modas vs. Vivara Participaes SA | CA Modas vs. Guararapes Confeces SA | CA Modas vs. Atacado SA |
| Braskem SA vs. Braskem SA | Braskem SA vs. Braskem SA | Braskem SA vs. Bradespar SA | Braskem SA vs. Unipar Carbocloro 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |