Correlation Between Sony and Braskem SA

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

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

Diversification Opportunities for Sony and Braskem SA

0.21

Correlation Coefficient

Sony  Braskem SA

Modest diversification

The 3 months correlation between Sony and Braskem is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Sony 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 Sony Group 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 Sony i.e., Sony and Braskem SA go up and down completely randomly.

Pair Corralation between Sony and Braskem SA

Assuming the 90 days trading horizon Sony Group is expected to under-perform the Braskem SA. But the stock apears to be less risky and, when comparing its historical volatility, Sony Group is 1.74 times less risky than Braskem SA. The stock trades about -0.01 of its potential returns per unit of risk. The Braskem SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,972  in Braskem SA on February 20, 2024 and sell it today you would earn a total of  8.00  from holding Braskem SA or generate 0.41% return on investment over 90 days.

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

Sony Group  vs.  Braskem SA

Sony Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sony Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sony is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Braskem SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Braskem SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Braskem SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sony and Braskem SA

The main advantage of trading using opposite Sony and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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 Sony Group and Braskem SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..