Correlation Between CSN Minerao and Razen SA

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

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

Diversification Opportunities for CSN Minerao and Razen SA

0.04

Correlation Coefficient

CSN Minerao  Razen SA

Significant diversification

The 3 months correlation between CSN and Razen is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CSN Minerao SA and Razen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Razen SA and CSN Minerao 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 CSN Minerao SA are associated (or correlated) with Razen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Razen SA has no effect on the direction of CSN Minerao i.e., CSN Minerao and Razen SA go up and down completely randomly.

Pair Corralation between CSN Minerao and Razen SA

Assuming the 90 days trading horizon CSN Minerao SA is expected to generate 0.76 times more return on investment than Razen SA. However, CSN Minerao SA is 1.31 times less risky than Razen SA. It trades about -0.11 of its potential returns per unit of risk. Razen SA is currently generating about -0.17 per unit of risk. If you would invest  546.00  in CSN Minerao SA on December 2, 2024 and sell it today you would lose (36.00) from holding CSN Minerao SA or give up 6.59% of portfolio value over 90 days.

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

CSN Minerao SA  vs.  Razen SA

CSN Minerao SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSN Minerao SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CSN Minerao is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Razen SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Razen 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.

Pair Trading with CSN Minerao and Razen SA

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

The idea behind CSN Minerao SA and Razen 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.