Correlation Between Ganfeng Lithium and Braskem SA

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

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

Diversification Opportunities for Ganfeng Lithium and Braskem SA

-0.29

Correlation Coefficient

Ganfeng Lithium  Braskem SA

Very good diversification

The 3 months correlation between Ganfeng and Braskem is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ganfeng Lithium Co 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 Ganfeng Lithium 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 Ganfeng Lithium Co 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 Ganfeng Lithium i.e., Ganfeng Lithium and Braskem SA go up and down completely randomly.

Pair Corralation between Ganfeng Lithium and Braskem SA

Assuming the 90 days horizon Ganfeng Lithium Co is expected to generate 1.57 times more return on investment than Braskem SA. However, Ganfeng Lithium is 1.57 times more volatile than Braskem SA Class. It trades about 0.0 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.03 per unit of risk. If you would invest  394.00  in Ganfeng Lithium Co on September 21, 2024 and sell it today you would lose (141.00) from holding Ganfeng Lithium Co or give up 35.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Ganfeng Lithium Co  vs.  Braskem SA Class

Ganfeng Lithium

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ganfeng Lithium Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Ganfeng Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

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 inconsistent 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.

Pair Trading with Ganfeng Lithium and Braskem SA

The main advantage of trading using opposite Ganfeng Lithium and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ganfeng Lithium 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 Ganfeng Lithium Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.