Correlation Between Companhia Siderrgica and Nucor
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and Nucor 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 Nucor 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 Nucor, you can compare the effects of market volatilities on Companhia Siderrgica and Nucor 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 Nucor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Nucor.
Diversification Opportunities for Companhia Siderrgica and Nucor
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Nucor is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor 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 Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Nucor go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Nucor
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to under-perform the Nucor. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Siderrgica Nacional is 1.05 times less risky than Nucor. The stock trades about -0.15 of its potential returns per unit of risk. The Nucor is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 6,851 in Nucor on October 23, 2024 and sell it today you would lose (511.00) from holding Nucor or give up 7.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Companhia Siderrgica Nacional vs. Nucor
Performance |
Timeline |
Companhia Siderrgica |
Nucor |
Companhia Siderrgica and Nucor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Companhia Siderrgica and Nucor
The main advantage of trading using opposite Companhia Siderrgica and Nucor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, Nucor 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 Nucor will offset losses from the drop in Nucor's long position.Companhia Siderrgica vs. BrasilAgro Companhia | Companhia Siderrgica vs. Indstrias Romi SA | Companhia Siderrgica vs. Trisul SA | Companhia Siderrgica vs. JHSF Participaes SA |
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Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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