Correlation Between Braskem SA and Collective Mining

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

Diversification Opportunities for Braskem SA and Collective Mining

-0.46

Correlation Coefficient

Braskem SA  Collective Mining

Very good diversification

The 3 months correlation between Braskem and Collective is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining 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 Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Braskem SA i.e., Braskem SA and Collective Mining go up and down completely randomly.

Pair Corralation between Braskem SA and Collective Mining

Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Collective Mining. But the stock apears to be less risky and, when comparing its historical volatility, Braskem SA Class is 1.14 times less risky than Collective Mining. The stock trades about -0.16 of its potential returns per unit of risk. The Collective Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  334.00  in Collective Mining on September 12, 2024 and sell it today you would earn a total of  23.00  from holding Collective Mining or generate 6.89% return on investment over 90 days.

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

Braskem SA Class  vs.  Collective Mining

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.

Collective Mining

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Collective Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Braskem SA and Collective Mining

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

The idea behind Braskem SA Class and Collective Mining 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.