Correlation Between Sealed Air and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Braskem SA Class, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Braskem SA.
Diversification Opportunities for Sealed Air and Braskem SA
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sealed and Braskem is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air 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 Sealed Air 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 Sealed Air 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 Sealed Air i.e., Sealed Air and Braskem SA go up and down completely randomly.
Pair Corralation between Sealed Air and Braskem SA
Considering the 90-day investment horizon Sealed Air is expected to generate 0.61 times more return on investment than Braskem SA. However, Sealed Air is 1.65 times less risky than Braskem SA. It trades about 0.03 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.03 per unit of risk. If you would invest 3,282 in Sealed Air on August 26, 2024 and sell it today you would earn a total of 308.00 from holding Sealed Air or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sealed Air vs. Braskem SA Class
Performance |
| Timeline |
| Sealed Air |
| Braskem SA Class |
Sealed Air and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Braskem SA
The main advantage of trading using opposite Sealed Air and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.| Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Ball Corporation |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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