Correlation Between Braskem SA and PETRONAS Chemicals

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

Diversification Opportunities for Braskem SA and PETRONAS Chemicals

0.0

Correlation Coefficient

Braskem SA  PETRONAS Chemicals

Pay attention - limited upside

The 3 months correlation between Braskem and PETRONAS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and PETRONAS Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETRONAS Chemicals 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 PETRONAS Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETRONAS Chemicals has no effect on the direction of Braskem SA i.e., Braskem SA and PETRONAS Chemicals go up and down completely randomly.

Pair Corralation between Braskem SA and PETRONAS Chemicals

If you would invest  93.00  in PETRONAS Chemicals Group on October 6, 2024 and sell it today you would earn a total of  0.00  from holding PETRONAS Chemicals Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Braskem SA Class  vs.  PETRONAS Chemicals Group

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PETRONAS Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PETRONAS Chemicals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PETRONAS Chemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Braskem SA and PETRONAS Chemicals

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

The idea behind Braskem SA Class and PETRONAS Chemicals Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.