Correlation Between Eucatex SA and Usinas Siderrgicas

Can any of the company-specific risk be diversified away by investing in both Eucatex SA 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 Eucatex SA and Usinas Siderrgicas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eucatex SA Indstria and Usinas Siderrgicas de, you can compare the effects of market volatilities on Eucatex SA 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 Eucatex SA with a short position of Usinas Siderrgicas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eucatex SA and Usinas Siderrgicas.

Diversification Opportunities for Eucatex SA and Usinas Siderrgicas

-0.21

Correlation Coefficient

Eucatex SA  Usinas Siderrgicas

Very good diversification

The 3 months correlation between Eucatex and Usinas is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eucatex SA Indstria and Usinas Siderrgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderrgicas and Eucatex SA 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 Eucatex SA Indstria 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 Eucatex SA i.e., Eucatex SA and Usinas Siderrgicas go up and down completely randomly.

Pair Corralation between Eucatex SA and Usinas Siderrgicas

Assuming the 90 days trading horizon Eucatex SA Indstria is expected to under-perform the Usinas Siderrgicas. But the preferred stock apears to be less risky and, when comparing its historical volatility, Eucatex SA Indstria is 1.29 times less risky than Usinas Siderrgicas. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Usinas Siderrgicas de is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  617.00  in Usinas Siderrgicas de on December 2, 2024 and sell it today you would lose (46.00) from holding Usinas Siderrgicas de or give up 7.46% of portfolio value over 90 days.

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

Eucatex SA Indstria  vs.  Usinas Siderrgicas de

Eucatex SA Indstria

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eucatex SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eucatex SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Usinas Siderrgicas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Usinas Siderrgicas de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Usinas Siderrgicas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eucatex SA and Usinas Siderrgicas

The main advantage of trading using opposite Eucatex SA and Usinas Siderrgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eucatex SA 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 Eucatex SA Indstria 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.