Correlation Between Braskem SA and Flameret

Can any of the company-specific risk be diversified away by investing in both Braskem SA and Flameret 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 Flameret 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 Flameret, you can compare the effects of market volatilities on Braskem SA and Flameret 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 Flameret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Flameret.

Diversification Opportunities for Braskem SA and Flameret

0.57

Correlation Coefficient

Braskem SA  Flameret

Very weak diversification

The 3 months correlation between Braskem and Flameret is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Flameret in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flameret 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 Flameret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flameret has no effect on the direction of Braskem SA i.e., Braskem SA and Flameret go up and down completely randomly.

Pair Corralation between Braskem SA and Flameret

Considering the 90-day investment horizon Braskem SA Class is expected to generate 0.11 times more return on investment than Flameret. However, Braskem SA Class is 9.11 times less risky than Flameret. It trades about -0.38 of its potential returns per unit of risk. Flameret is currently generating about -0.1 per unit of risk. If you would invest  533.00  in Braskem SA Class on September 25, 2024 and sell it today you would lose (141.50) from holding Braskem SA Class or give up 26.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Braskem SA Class  vs.  Flameret

Braskem SA Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braskem SA Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Flameret

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flameret has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Braskem SA and Flameret

The main advantage of trading using opposite Braskem SA and Flameret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Flameret 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 Flameret will offset losses from the drop in Flameret's long position.

The idea behind Braskem SA Class and Flameret 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.