Correlation Between Gol Linhas and Usinas Siderrgicas

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

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

Diversification Opportunities for Gol Linhas and Usinas Siderrgicas

0.11

Correlation Coefficient

Gol Linhas  Usinas Siderrgicas

Average diversification

The 3 months correlation between Gol and Usinas is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gol Linhas Areas and Usinas Siderrgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderrgicas and Gol Linhas 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 Gol Linhas Areas 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 Gol Linhas i.e., Gol Linhas and Usinas Siderrgicas go up and down completely randomly.

Pair Corralation between Gol Linhas and Usinas Siderrgicas

Assuming the 90 days trading horizon Gol Linhas Areas is expected to generate 1.41 times more return on investment than Usinas Siderrgicas. However, Gol Linhas is 1.41 times more volatile than Usinas Siderrgicas de. It trades about 0.13 of its potential returns per unit of risk. Usinas Siderrgicas de is currently generating about 0.03 per unit of risk. If you would invest  104.00  in Gol Linhas Areas on September 3, 2024 and sell it today you would earn a total of  30.00  from holding Gol Linhas Areas or generate 28.85% return on investment over 90 days.

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

Gol Linhas Areas  vs.  Usinas Siderrgicas de

Gol Linhas Areas

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gol Linhas Areas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gol Linhas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Usinas Siderrgicas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderrgicas de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Gol Linhas and Usinas Siderrgicas

The main advantage of trading using opposite Gol Linhas and Usinas Siderrgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Linhas 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 Gol Linhas Areas 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.