Correlation Between Braskem SA and Tarena International

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

Diversification Opportunities for Braskem SA and Tarena International

0.57

Correlation Coefficient

Braskem SA  Tarena International

Very weak diversification

The 3 months correlation between Braskem and Tarena is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International 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 Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of Braskem SA i.e., Braskem SA and Tarena International go up and down completely randomly.

Pair Corralation between Braskem SA and Tarena International

Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Tarena International. But the stock apears to be less risky and, when comparing its historical volatility, Braskem SA Class is 1.77 times less risky than Tarena International. The stock trades about -0.34 of its potential returns per unit of risk. The Tarena International is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Tarena International on September 1, 2024 and sell it today you would lose (16.00) from holding Tarena International or give up 16.16% of portfolio value over 90 days.

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

Braskem SA Class  vs.  Tarena International

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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tarena International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarena International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Braskem SA and Tarena International

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

The idea behind Braskem SA Class and Tarena International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.