Correlation Between Spire Global and Braskem SA

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

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

Diversification Opportunities for Spire Global and Braskem SA

-0.85

Correlation Coefficient

Spire Global  Braskem SA

Pay attention - limited upside

The 3 months correlation between Spire and Braskem is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Spire Global 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 Spire Global are associated (or correlated) with Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA has no effect on the direction of Spire Global i.e., Spire Global and Braskem SA go up and down completely randomly.

Pair Corralation between Spire Global and Braskem SA

Given the investment horizon of 90 days Spire Global is expected to generate 1.23 times more return on investment than Braskem SA. However, Spire Global is 1.23 times more volatile than Braskem SA. It trades about 0.17 of its potential returns per unit of risk. Braskem SA is currently generating about -0.12 per unit of risk. If you would invest  930.00  in Spire Global on September 13, 2024 and sell it today you would earn a total of  451.00  from holding Spire Global or generate 48.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Spire Global  vs.  Braskem SA

Spire Global

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Braskem SA

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Spire Global and Braskem SA

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

The idea behind Spire Global and Braskem 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.