Correlation Between Companhia Siderrgica and Usinas Siderrgicas

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

Diversification Opportunities for Companhia Siderrgica and Usinas Siderrgicas

-0.1

Correlation Coefficient

Companhia Siderrgica  Usinas Siderrgicas

Good diversification

The 3 months correlation between Companhia and Usinas is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Usinas Siderrgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderrgicas 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 Usinas Siderrgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderrgicas has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Usinas Siderrgicas go up and down completely randomly.

Pair Corralation between Companhia Siderrgica and Usinas Siderrgicas

Assuming the 90 days trading horizon Companhia Siderrgica is expected to generate 6.91 times less return on investment than Usinas Siderrgicas. But when comparing it to its historical volatility, Companhia Siderrgica Nacional is 1.65 times less risky than Usinas Siderrgicas. It trades about 0.03 of its potential returns per unit of risk. Usinas Siderrgicas de is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  990.00  in Usinas Siderrgicas de on September 4, 2024 and sell it today you would earn a total of  384.00  from holding Usinas Siderrgicas de or generate 38.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Companhia Siderrgica Nacional  vs.  Usinas Siderrgicas de

Companhia Siderrgica

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderrgica Nacional are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia Siderrgica is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Usinas Siderrgicas

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderrgicas de are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Usinas Siderrgicas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Companhia Siderrgica and Usinas Siderrgicas

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

The idea behind Companhia Siderrgica Nacional and Usinas Siderrgicas de 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.