Correlation Between Companhia Siderrgica and Cia De

Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and Cia De 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 Cia De 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 Cia de Ferro, you can compare the effects of market volatilities on Companhia Siderrgica and Cia De 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 Cia De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Cia De.

Diversification Opportunities for Companhia Siderrgica and Cia De

-0.47

Correlation Coefficient

Companhia Siderrgica  Cia De

Very good diversification

The 3 months correlation between Companhia and Cia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Cia de Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia de Ferro 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 Cia De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia de Ferro has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Cia De go up and down completely randomly.

Pair Corralation between Companhia Siderrgica and Cia De

Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to under-perform the Cia De. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Siderrgica Nacional is 1.14 times less risky than Cia De. The stock trades about -0.12 of its potential returns per unit of risk. The Cia de Ferro is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,162  in Cia de Ferro on December 2, 2024 and sell it today you would earn a total of  38.00  from holding Cia de Ferro or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Companhia Siderrgica Nacional  vs.  Cia de Ferro

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.

Cia de Ferro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cia de Ferro are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cia De may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Companhia Siderrgica and Cia De

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

The idea behind Companhia Siderrgica Nacional and Cia de Ferro 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.