Correlation Between Braskem SA and Westlake Chemical

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

Diversification Opportunities for Braskem SA and Westlake Chemical

0.42

Correlation Coefficient

Braskem SA  Westlake Chemical

Very weak diversification

The 3 months correlation between Braskem and Westlake is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA Class and Westlake Chemical Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical 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 Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of Braskem SA i.e., Braskem SA and Westlake Chemical go up and down completely randomly.

Pair Corralation between Braskem SA and Westlake Chemical

Considering the 90-day investment horizon Braskem SA Class is expected to under-perform the Westlake Chemical. In addition to that, Braskem SA is 5.56 times more volatile than Westlake Chemical Partners. It trades about -0.05 of its total potential returns per unit of risk. Westlake Chemical Partners is currently generating about -0.09 per unit of volatility. If you would invest  2,260  in Westlake Chemical Partners on May 7, 2025 and sell it today you would lose (80.00) from holding Westlake Chemical Partners or give up 3.54% 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.  Westlake Chemical Partners

Braskem SA Class

Risk-Adjusted Performance

Weakest

Over the last 90 days Braskem SA Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Westlake Chemical

Risk-Adjusted Performance

Weakest

Over the last 90 days Westlake Chemical Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Westlake Chemical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Braskem SA and Westlake Chemical

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

The idea behind Braskem SA Class and Westlake Chemical Partners 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.