Correlation Between Companhia Siderrgica and Nucor

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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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Companhia Siderrgica Nacional  vs.  Nucor

 Performance 
       Timeline  
Companhia Siderrgica 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Nucor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nucor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.
The idea behind Companhia Siderrgica Nacional and Nucor 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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