Correlation Between Cia De and Nucor

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

By analyzing existing cross correlation between Cia de Ferro and Nucor, you can compare the effects of market volatilities on Cia De 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 Cia De with a short position of Nucor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and Nucor.

Diversification Opportunities for Cia De and Nucor

-0.13

Correlation Coefficient

Cia De  Nucor

Good diversification

The 3 months correlation between Cia and Nucor is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Ferro and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor and Cia De 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 Cia de Ferro 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 Cia De i.e., Cia De and Nucor go up and down completely randomly.

Pair Corralation between Cia De and Nucor

Assuming the 90 days trading horizon Cia de Ferro is expected to under-perform the Nucor. But the preferred stock apears to be less risky and, when comparing its historical volatility, Cia de Ferro is 1.25 times less risky than Nucor. The preferred stock trades about -0.05 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  6,006  in Nucor on December 23, 2024 and sell it today you would lose (209.00) from holding Nucor or give up 3.48% of portfolio value over 90 days.

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

Cia de Ferro  vs.  Nucor

Cia de Ferro

Risk-Adjusted Performance

Very Weak

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

Nucor

Risk-Adjusted Performance

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.

Pair Trading with Cia De and Nucor

The main advantage of trading using opposite Cia De and Nucor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De 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 Cia de Ferro 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.