Correlation Between Companhia Siderrgica and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica 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 Companhia Siderrgica and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Siderrgica Nacional and Braskem SA, you can compare the effects of market volatilities on Companhia Siderrgica 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 Companhia Siderrgica with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Braskem SA.
Diversification Opportunities for Companhia Siderrgica and Braskem SA
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Braskem is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Companhia Siderrgica 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 Companhia Siderrgica Nacional 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 Companhia Siderrgica i.e., Companhia Siderrgica and Braskem SA go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Braskem SA
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to generate 0.92 times more return on investment than Braskem SA. However, Companhia Siderrgica Nacional is 1.09 times less risky than Braskem SA. It trades about 0.12 of its potential returns per unit of risk. Braskem SA is currently generating about 0.08 per unit of risk. If you would invest 813.00 in Companhia Siderrgica Nacional on November 18, 2024 and sell it today you would earn a total of 61.00 from holding Companhia Siderrgica Nacional or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. Braskem SA
Performance |
| Timeline |
| Companhia Siderrgica |
| Braskem SA |
Companhia Siderrgica and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and Braskem SA
The main advantage of trading using opposite Companhia Siderrgica and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica 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.| Companhia Siderrgica vs. Check Point Software | Companhia Siderrgica vs. British American Tobacco | Companhia Siderrgica vs. Hospital Mater Dei | Companhia Siderrgica vs. CVS Health |
| Braskem SA vs. Companhia Siderrgica Nacional | Braskem SA vs. Usinas Siderrgicas de | Braskem SA vs. Gerdau SA | Braskem SA vs. Companhia Energtica de |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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