Correlation Between Shin Etsu and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Shin Etsu 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 Shin Etsu and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Etsu Chemical Co and Braskem SA Class, you can compare the effects of market volatilities on Shin Etsu 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 Shin Etsu with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and Braskem SA.
Diversification Opportunities for Shin Etsu and Braskem SA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and Braskem is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical 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 Shin Etsu 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 Shin Etsu Chemical 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 Shin Etsu i.e., Shin Etsu and Braskem SA go up and down completely randomly.
Pair Corralation between Shin Etsu and Braskem SA
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to generate 0.62 times more return on investment than Braskem SA. However, Shin Etsu Chemical Co is 1.62 times less risky than Braskem SA. It trades about 0.02 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.05 per unit of risk. If you would invest 1,670 in Shin Etsu Chemical Co on August 28, 2024 and sell it today you would earn a total of 161.00 from holding Shin Etsu Chemical Co or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Braskem SA Class
Performance |
| Timeline |
| Shin Etsu Chemical |
| Braskem SA Class |
Shin Etsu and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and Braskem SA
The main advantage of trading using opposite Shin Etsu and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu 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.| Shin Etsu vs. Origin Materials | Shin Etsu vs. BASF SE NA | Shin Etsu vs. Braskem SA Class | Shin Etsu vs. Lsb Industries |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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