Correlation Between EnCore Energy and Braskem SA
Can any of the company-specific risk be diversified away by investing in both EnCore Energy 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 EnCore Energy and Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between enCore Energy Corp and Braskem SA Class, you can compare the effects of market volatilities on EnCore Energy 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 EnCore Energy with a short position of Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and Braskem SA.
Diversification Opportunities for EnCore Energy and Braskem SA
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between EnCore and Braskem is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Braskem SA Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA Class and EnCore Energy 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 enCore Energy Corp 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 Class has no effect on the direction of EnCore Energy i.e., EnCore Energy and Braskem SA go up and down completely randomly.
Pair Corralation between EnCore Energy and Braskem SA
Allowing for the 90-day total investment horizon enCore Energy Corp is expected to generate 0.9 times more return on investment than Braskem SA. However, enCore Energy Corp is 1.11 times less risky than Braskem SA. It trades about 0.11 of its potential returns per unit of risk. Braskem SA Class is currently generating about 0.03 per unit of risk. If you would invest 194.00 in enCore Energy Corp on February 16, 2024 and sell it today you would earn a total of 251.00 from holding enCore Energy Corp or generate 129.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
enCore Energy Corp vs. Braskem SA Class
Performance |
Timeline |
enCore Energy Corp |
Braskem SA Class |
EnCore Energy and Braskem SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EnCore Energy and Braskem SA
The main advantage of trading using opposite EnCore Energy and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnCore Energy 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.EnCore Energy vs. Cameco Corp | EnCore Energy vs. Denison Mines Corp | EnCore Energy vs. IperionX Limited American | EnCore Energy vs. Centrus Energy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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