Correlation Between Braskem SA and Ivanhoe Electric

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

Diversification Opportunities for Braskem SA and Ivanhoe Electric

-0.14

Correlation Coefficient

Braskem SA  Ivanhoe Electric

Good diversification

The 3 months correlation between Braskem and Ivanhoe is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric 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 Ivanhoe Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Electric has no effect on the direction of Braskem SA i.e., Braskem SA and Ivanhoe Electric go up and down completely randomly.

Pair Corralation between Braskem SA and Ivanhoe Electric

Considering the 90-day investment horizon Braskem SA Class is expected to generate 1.0 times more return on investment than Ivanhoe Electric. However, Braskem SA Class is 1.0 times less risky than Ivanhoe Electric. It trades about 0.03 of its potential returns per unit of risk. Ivanhoe Electric is currently generating about -0.06 per unit of risk. If you would invest  380.00  in Braskem SA Class on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Braskem SA Class or generate 3.95% return on investment over 90 days.

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

Braskem SA Class  vs.  Ivanhoe Electric

Braskem SA Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Braskem SA Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Braskem SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ivanhoe Electric

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Braskem SA and Ivanhoe Electric

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

The idea behind Braskem SA Class and Ivanhoe Electric 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.