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

-0.17

Correlation Coefficient

EnCore Energy  Braskem SA

Good diversification

The 3 months correlation between EnCore and Braskem is -0.17. 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 under-perform the Braskem SA. In addition to that, EnCore Energy is 1.42 times more volatile than Braskem SA Class. It trades about -0.24 of its total potential returns per unit of risk. Braskem SA Class is currently generating about -0.16 per unit of volatility. If you would invest  732.00  in Braskem SA Class on March 14, 2024 and sell it today you would lose (51.00) from holding Braskem SA Class or give up 6.97% of portfolio value 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

enCore Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

The idea behind enCore Energy Corp and Braskem SA Class 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.