Correlation Between Eastman Chemical and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Braskem SA, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Braskem SA.
Diversification Opportunities for Eastman Chemical and Braskem SA
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastman and Braskem is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Braskem SA go up and down completely randomly.
Pair Corralation between Eastman Chemical and Braskem SA
Assuming the 90 days trading horizon Eastman Chemical is expected to generate 3.08 times less return on investment than Braskem SA. But when comparing it to its historical volatility, Eastman Chemical is 5.31 times less risky than Braskem SA. It trades about 0.22 of its potential returns per unit of risk. Braskem SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,222 in Braskem SA on November 5, 2024 and sell it today you would earn a total of 106.00 from holding Braskem SA or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Braskem SA
Performance |
| Timeline |
| Eastman Chemical |
| Braskem SA |
Eastman Chemical and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Braskem SA
The main advantage of trading using opposite Eastman Chemical and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Clover Health Investments, | Eastman Chemical vs. Check Point Software | Eastman Chemical vs. Take Two Interactive Software | Eastman Chemical vs. Elevance Health, |
| Braskem SA vs. Patria Investments Limited | Braskem SA vs. Automatic Data Processing | Braskem SA vs. Charter Communications | Braskem SA vs. G2D Investments |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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