Correlation Between Alupar Investimento and United States

Can any of the company-specific risk be diversified away by investing in both Alupar Investimento and United States 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 Alupar Investimento and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alupar Investimento and United States

0.71

Correlation Coefficient

Alupar Investimento  United States

Poor diversification

The 3 months correlation between Alupar and United is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alupar Investimento SA and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Alupar Investimento 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 Alupar Investimento SA are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Alupar Investimento i.e., Alupar Investimento and United States go up and down completely randomly.

Pair Corralation between Alupar Investimento and United States

Assuming the 90 days trading horizon Alupar Investimento is expected to generate 3.13 times less return on investment than United States. But when comparing it to its historical volatility, Alupar Investimento SA is 1.48 times less risky than United States. It trades about 0.09 of its potential returns per unit of risk. United States Steel is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  19,173  in United States Steel on December 29, 2024 and sell it today you would earn a total of  5,489  from holding United States Steel or generate 28.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Alupar Investimento SA  vs.  United States Steel

Alupar Investimento

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alupar Investimento SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alupar Investimento may actually be approaching a critical reversion point that can send shares even higher in April 2025.

United States Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United States sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alupar Investimento and United States

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

The idea behind Alupar Investimento SA and United States Steel 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..