Correlation Between Telefnica Brasil and Braskem SA

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

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

Diversification Opportunities for Telefnica Brasil and Braskem SA

0.67

Correlation Coefficient

Telefnica Brasil  Braskem SA

Poor diversification

The 3 months correlation between Telefnica and Braskem is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Telefnica Brasil SA and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA and Telefnica Brasil 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 Telefnica Brasil SA 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 Telefnica Brasil i.e., Telefnica Brasil and Braskem SA go up and down completely randomly.

Pair Corralation between Telefnica Brasil and Braskem SA

Assuming the 90 days trading horizon Telefnica Brasil is expected to generate 1.09 times less return on investment than Braskem SA. But when comparing it to its historical volatility, Telefnica Brasil SA is 1.92 times less risky than Braskem SA. It trades about 0.16 of its potential returns per unit of risk. Braskem SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  756.00  in Braskem SA on April 25, 2025 and sell it today you would earn a total of  104.00  from holding Braskem SA or generate 13.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Telefnica Brasil SA  vs.  Braskem SA

Telefnica Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica Brasil SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telefnica Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Braskem SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Braskem SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Braskem SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telefnica Brasil and Braskem SA

The main advantage of trading using opposite Telefnica Brasil and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefnica Brasil 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 Telefnica Brasil SA 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.