Correlation Between Sumitomo Mitsui and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Braskem SA, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Braskem SA.
Diversification Opportunities for Sumitomo Mitsui and Braskem SA
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and Braskem is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Sumitomo Mitsui 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 Sumitomo Mitsui Financial 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Braskem SA go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Braskem SA
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.0 times more return on investment than Braskem SA. However, Sumitomo Mitsui Financial is 1.0 times less risky than Braskem SA. It trades about 0.09 of its potential returns per unit of risk. Braskem SA is currently generating about -0.09 per unit of risk. If you would invest 6,426 in Sumitomo Mitsui Financial on August 24, 2024 and sell it today you would earn a total of 1,566 from holding Sumitomo Mitsui Financial or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Braskem SA
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Braskem SA |
Sumitomo Mitsui and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Braskem SA
The main advantage of trading using opposite Sumitomo Mitsui and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. BTG Pactual Logstica | Sumitomo Mitsui vs. Plano Plano Desenvolvimento | Sumitomo Mitsui vs. Companhia Habitasul de |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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