Correlation Between Origin Materials and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Origin Materials 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 Origin Materials and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and Braskem SA Class, you can compare the effects of market volatilities on Origin Materials 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 Origin Materials with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Braskem SA.
Diversification Opportunities for Origin Materials and Braskem SA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Origin and Braskem is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials 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 Origin Materials 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 Origin Materials 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 Origin Materials i.e., Origin Materials and Braskem SA go up and down completely randomly.
Pair Corralation between Origin Materials and Braskem SA
Given the investment horizon of 90 days Origin Materials is expected to generate 2.08 times more return on investment than Braskem SA. However, Origin Materials is 2.08 times more volatile than Braskem SA Class. It trades about 0.0 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.02 per unit of risk. If you would invest 502.00 in Origin Materials on August 28, 2024 and sell it today you would lose (378.00) from holding Origin Materials or give up 75.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Origin Materials vs. Braskem SA Class
Performance |
| Timeline |
| Origin Materials |
| Braskem SA Class |
Origin Materials and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Braskem SA
The main advantage of trading using opposite Origin Materials and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials 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.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| Braskem SA vs. Huntsman | Braskem SA vs. AdvanSix | Braskem SA vs. Celanese | Braskem SA vs. Green Plains Renewable |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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