Correlation Between Braskem SA and Dexxos Participaes

Can any of the company-specific risk be diversified away by investing in both Braskem SA and Dexxos Participaes 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 Dexxos Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Braskem SA and Dexxos Participaes SA, you can compare the effects of market volatilities on Braskem SA and Dexxos Participaes 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 Dexxos Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Dexxos Participaes.

Diversification Opportunities for Braskem SA and Dexxos Participaes

0.77

Correlation Coefficient

Braskem SA  Dexxos Participaes

Poor diversification

The 3 months correlation between Braskem and Dexxos is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA and Dexxos Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexxos Participaes 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 are associated (or correlated) with Dexxos Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexxos Participaes has no effect on the direction of Braskem SA i.e., Braskem SA and Dexxos Participaes go up and down completely randomly.

Pair Corralation between Braskem SA and Dexxos Participaes

Assuming the 90 days trading horizon Braskem SA is expected to generate 1.6 times more return on investment than Dexxos Participaes. However, Braskem SA is 1.6 times more volatile than Dexxos Participaes SA. It trades about 0.0 of its potential returns per unit of risk. Dexxos Participaes SA is currently generating about -0.04 per unit of risk. If you would invest  1,210  in Braskem SA on December 29, 2024 and sell it today you would lose (30.00) from holding Braskem SA or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Braskem SA  vs.  Dexxos Participaes SA

Braskem SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Braskem SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Braskem SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Dexxos Participaes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dexxos Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dexxos Participaes is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Braskem SA and Dexxos Participaes

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

The idea behind Braskem SA and Dexxos Participaes SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.