Correlation Between Caixa Seguridade and CSN Minerao

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

By analyzing existing cross correlation between Caixa Seguridade Participaes and CSN Minerao SA, you can compare the effects of market volatilities on Caixa Seguridade and CSN Minerao 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 Caixa Seguridade with a short position of CSN Minerao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixa Seguridade and CSN Minerao.

Diversification Opportunities for Caixa Seguridade and CSN Minerao

0.6

Correlation Coefficient

Caixa Seguridade  CSN Minerao

Poor diversification

The 3 months correlation between Caixa and CSN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caixa Seguridade Participaes and CSN Minerao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSN Minerao SA and Caixa Seguridade 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 Caixa Seguridade Participaes are associated (or correlated) with CSN Minerao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSN Minerao SA has no effect on the direction of Caixa Seguridade i.e., Caixa Seguridade and CSN Minerao go up and down completely randomly.

Pair Corralation between Caixa Seguridade and CSN Minerao

Assuming the 90 days trading horizon Caixa Seguridade is expected to generate 2.53 times less return on investment than CSN Minerao. But when comparing it to its historical volatility, Caixa Seguridade Participaes is 2.0 times less risky than CSN Minerao. It trades about 0.1 of its potential returns per unit of risk. CSN Minerao SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  511.00  in CSN Minerao SA on December 30, 2024 and sell it today you would earn a total of  119.00  from holding CSN Minerao SA or generate 23.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Caixa Seguridade Participaes  vs.  CSN Minerao SA

Caixa Seguridade Par

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caixa Seguridade Participaes are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caixa Seguridade may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CSN Minerao SA

Risk-Adjusted Performance

OK

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

Pair Trading with Caixa Seguridade and CSN Minerao

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

The idea behind Caixa Seguridade Participaes and CSN Minerao SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.