Correlation Between Braskem SA and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Insteel Industries 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 Insteel Industries 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 Insteel Industries, you can compare the effects of market volatilities on Braskem SA and Insteel Industries 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 Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Insteel Industries.
Diversification Opportunities for Braskem SA and Insteel Industries
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Braskem and Insteel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Braskem SA i.e., Braskem SA and Insteel Industries go up and down completely randomly.
Pair Corralation between Braskem SA and Insteel Industries
Considering the 90-day investment horizon Braskem SA Class is expected to generate 1.64 times more return on investment than Insteel Industries. However, Braskem SA is 1.64 times more volatile than Insteel Industries. It trades about 0.05 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.03 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 33.00 from holding Braskem SA Class or generate 8.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Braskem SA Class vs. Insteel Industries
Performance |
Timeline |
Braskem SA Class |
Insteel Industries |
Braskem SA and Insteel Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Braskem SA and Insteel Industries
The main advantage of trading using opposite Braskem SA and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.Braskem SA vs. Valhi Inc | Braskem SA vs. Huntsman | Braskem SA vs. Lsb Industries | Braskem SA vs. Westlake Chemical Partners |
Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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