Correlation Between Mitsubishi Chemical and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Mitsubishi 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 Mitsubishi 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 Mitsubishi Chemical Holdings and Braskem SA Class, you can compare the effects of market volatilities on Mitsubishi 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 Mitsubishi Chemical with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Chemical and Braskem SA.
Diversification Opportunities for Mitsubishi Chemical and Braskem SA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mitsubishi and Braskem is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Chemical Holdings 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 Mitsubishi 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 Mitsubishi Chemical Holdings 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 Mitsubishi Chemical i.e., Mitsubishi Chemical and Braskem SA go up and down completely randomly.
Pair Corralation between Mitsubishi Chemical and Braskem SA
Assuming the 90 days horizon Mitsubishi Chemical is expected to generate 7.24 times less return on investment than Braskem SA. But when comparing it to its historical volatility, Mitsubishi Chemical Holdings is 3.33 times less risky than Braskem SA. It trades about 0.08 of its potential returns per unit of risk. Braskem SA Class is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Braskem SA Class on November 3, 2024 and sell it today you would earn a total of 64.00 from holding Braskem SA Class or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Chemical Holdings vs. Braskem SA Class
Performance |
| Timeline |
| Mitsubishi Chemical |
| Braskem SA Class |
Mitsubishi Chemical and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Chemical and Braskem SA
The main advantage of trading using opposite Mitsubishi Chemical and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi 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.| Mitsubishi Chemical vs. Sumitomo Chemical Co | Mitsubishi Chemical vs. Asahi Kaisei Corp | Mitsubishi Chemical vs. Nitto Denko Corp | Mitsubishi Chemical vs. Shin Etsu Chemical Co |
| Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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