Correlation Between Companhia Siderrgica and Companhia

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

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

Diversification Opportunities for Companhia Siderrgica and Companhia

-0.3

Correlation Coefficient

Companhia Siderrgica  Companhia

Very good diversification

The 3 months correlation between Companhia and Companhia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Companhia de Gs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Gs and Companhia Siderrgica 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 Companhia Siderrgica Nacional are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Gs has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Companhia go up and down completely randomly.

Pair Corralation between Companhia Siderrgica and Companhia

Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to under-perform the Companhia. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Siderrgica Nacional is 1.64 times less risky than Companhia. The stock trades about 0.0 of its potential returns per unit of risk. The Companhia de Gs is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,454  in Companhia de Gs on September 23, 2024 and sell it today you would earn a total of  2,133  from holding Companhia de Gs or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Companhia Siderrgica Nacional  vs.  Companhia de Gs

Companhia Siderrgica

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Companhia de Gs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Companhia Siderrgica and Companhia

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

The idea behind Companhia Siderrgica Nacional and Companhia de Gs 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.