Correlation Between Braskem SA and Constellium
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Constellium 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 Braskem SA and Constellium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braskem SA Class and Constellium Nv, you can compare the effects of market volatilities on Braskem SA and Constellium 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 Braskem SA with a short position of Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Constellium.
Diversification Opportunities for Braskem SA and Constellium
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Braskem and Constellium is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Braskem SA 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 Braskem SA Class are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Braskem SA i.e., Braskem SA and Constellium go up and down completely randomly.
Pair Corralation between Braskem SA and Constellium
Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Constellium. In addition to that, Braskem SA is 2.05 times more volatile than Constellium Nv. It trades about -0.03 of its total potential returns per unit of risk. Constellium Nv is currently generating about 0.13 per unit of volatility. If you would invest 1,878 in Constellium Nv on February 28, 2024 and sell it today you would earn a total of 287.00 from holding Constellium Nv or generate 15.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Braskem SA Class vs. Constellium Nv
Performance |
Timeline |
Braskem SA Class |
Constellium Nv |
Braskem SA and Constellium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Braskem SA and Constellium
The main advantage of trading using opposite Braskem SA and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.Braskem SA vs. Westlake Chemical Partners | Braskem SA vs. Tronox Holdings PLC | Braskem SA vs. AdvanSix | Braskem SA vs. Green Plains Renewable |
Constellium vs. Century Aluminum | Constellium vs. China Hongqiao Group | Constellium vs. Alumina Limited PK | Constellium vs. Norsk Hydro ASA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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