Correlation Between Aperam PK and Companhia Siderurgica

Can any of the company-specific risk be diversified away by investing in both Aperam PK and Companhia Siderurgica 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 Aperam PK and Companhia Siderurgica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aperam PK and Companhia Siderurgica Nacional, you can compare the effects of market volatilities on Aperam PK and Companhia Siderurgica 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 Aperam PK with a short position of Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aperam PK and Companhia Siderurgica.

Diversification Opportunities for Aperam PK and Companhia Siderurgica

0.63

Correlation Coefficient

Aperam PK  Companhia Siderurgica

Poor diversification

The 3 months correlation between Aperam and Companhia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica and Aperam PK 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 Aperam PK are associated (or correlated) with Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of Aperam PK i.e., Aperam PK and Companhia Siderurgica go up and down completely randomly.

Pair Corralation between Aperam PK and Companhia Siderurgica

Assuming the 90 days horizon Aperam PK is expected to generate 0.49 times more return on investment than Companhia Siderurgica. However, Aperam PK is 2.05 times less risky than Companhia Siderurgica. It trades about 0.26 of its potential returns per unit of risk. Companhia Siderurgica Nacional is currently generating about 0.09 per unit of risk. If you would invest  2,590  in Aperam PK on December 30, 2024 and sell it today you would earn a total of  755.00  from holding Aperam PK or generate 29.15% return on investment over 90 days.

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

Aperam PK  vs.  Companhia Siderurgica Nacional

Aperam PK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aperam PK are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, Aperam PK showed solid returns over the last few months and may actually be approaching a breakup point.

Companhia Siderurgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderurgica Nacional are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Companhia Siderurgica exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aperam PK and Companhia Siderurgica

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

The idea behind Aperam PK and Companhia Siderurgica Nacional 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 Global Correlations module to find global opportunities by holding instruments from different markets.