Correlation Between Braskem SA and CTEEP Companhia

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

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

Diversification Opportunities for Braskem SA and CTEEP Companhia

0.15

Correlation Coefficient

Braskem SA  CTEEP Companhia

Average diversification

The 3 months correlation between Braskem and CTEEP is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia 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 are associated (or correlated) with CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of Braskem SA i.e., Braskem SA and CTEEP Companhia go up and down completely randomly.

Pair Corralation between Braskem SA and CTEEP Companhia

Assuming the 90 days trading horizon Braskem SA is expected to under-perform the CTEEP Companhia. In addition to that, Braskem SA is 2.1 times more volatile than CTEEP Companhia. It trades about -0.15 of its total potential returns per unit of risk. CTEEP Companhia is currently generating about 0.03 per unit of volatility. If you would invest  2,470  in CTEEP Companhia on September 13, 2024 and sell it today you would earn a total of  48.00  from holding CTEEP Companhia or generate 1.94% return on investment over 90 days.

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

Braskem SA  vs.  CTEEP Companhia

Braskem SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braskem SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CTEEP Companhia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CTEEP Companhia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTEEP Companhia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Braskem SA and CTEEP Companhia

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

The idea behind Braskem SA and CTEEP Companhia 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.