Correlation Between Avient Corp and Braskem SA

Can any of the company-specific risk be diversified away by investing in both Avient Corp 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 Avient Corp and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avient Corp and Braskem SA Class, you can compare the effects of market volatilities on Avient Corp 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 Avient Corp with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Braskem SA.

Diversification Opportunities for Avient Corp and Braskem SA

0.75

Correlation Coefficient

Avient Corp  Braskem SA

Poor diversification

The 3 months correlation between Avient and Braskem is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp 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 Avient Corp 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 Avient Corp 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 Avient Corp i.e., Avient Corp and Braskem SA go up and down completely randomly.

Pair Corralation between Avient Corp and Braskem SA

Given the investment horizon of 90 days Avient Corp is expected to generate 0.5 times more return on investment than Braskem SA. However, Avient Corp is 1.99 times less risky than Braskem SA. It trades about 0.12 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.14 per unit of risk. If you would invest  4,269  in Avient Corp on February 6, 2024 and sell it today you would earn a total of  147.00  from holding Avient Corp or generate 3.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Avient Corp  vs.  Braskem SA Class

Avient Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Avient Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Braskem SA Class

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Braskem SA Class are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Braskem SA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avient Corp and Braskem SA

The main advantage of trading using opposite Avient Corp and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp 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.

The idea behind Avient Corp and Braskem SA Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.