Correlation Between Kuraray and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Kuraray 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 Kuraray and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuraray Co and Braskem SA Class, you can compare the effects of market volatilities on Kuraray 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 Kuraray with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuraray and Braskem SA.
Diversification Opportunities for Kuraray and Braskem SA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kuraray and Braskem is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kuraray Co and Braskem SA Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA Class and Kuraray 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 Kuraray Co 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 Class has no effect on the direction of Kuraray i.e., Kuraray and Braskem SA go up and down completely randomly.
Pair Corralation between Kuraray and Braskem SA
Assuming the 90 days horizon Kuraray Co is expected to generate 0.7 times more return on investment than Braskem SA. However, Kuraray Co is 1.43 times less risky than Braskem SA. It trades about 0.04 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.04 per unit of risk. If you would invest 2,775 in Kuraray Co on August 31, 2024 and sell it today you would earn a total of 900.00 from holding Kuraray Co or generate 32.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kuraray Co vs. Braskem SA Class
Performance |
| Timeline |
| Kuraray |
| Braskem SA Class |
Kuraray and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuraray and Braskem SA
The main advantage of trading using opposite Kuraray and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuraray 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.The idea behind Kuraray Co and Braskem SA Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Tronox Holdings PLC | Braskem SA vs. Celanese |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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