Correlation Between Minerva SA and Companhia Siderrgica

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

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

Diversification Opportunities for Minerva SA and Companhia Siderrgica

0.83

Correlation Coefficient

Minerva SA  Companhia Siderrgica

Very poor diversification

The 3 months correlation between Minerva and Companhia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Minerva SA and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and Minerva 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 Minerva SA are associated (or correlated) with Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Minerva SA i.e., Minerva SA and Companhia Siderrgica go up and down completely randomly.

Pair Corralation between Minerva SA and Companhia Siderrgica

Assuming the 90 days trading horizon Minerva SA is expected to under-perform the Companhia Siderrgica. In addition to that, Minerva SA is 1.1 times more volatile than Companhia Siderrgica Nacional. It trades about -0.12 of its total potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.12 per unit of volatility. If you would invest  1,118  in Companhia Siderrgica Nacional on December 1, 2024 and sell it today you would lose (266.00) from holding Companhia Siderrgica Nacional or give up 23.79% of portfolio value over 90 days.

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

Minerva SA  vs.  Companhia Siderrgica Nacional

Minerva SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minerva SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Companhia Siderrgica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia Siderrgica Nacional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Minerva SA and Companhia Siderrgica

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

The idea behind Minerva SA and Companhia Siderrgica 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.