Correlation Between Nucor and Triunfo Participaes

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

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

Diversification Opportunities for Nucor and Triunfo Participaes

0.57

Correlation Coefficient

Nucor  Triunfo Participaes

Very weak diversification

The 3 months correlation between Nucor and Triunfo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and Triunfo Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triunfo Participaes and Nucor 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 Nucor are associated (or correlated) with Triunfo Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triunfo Participaes has no effect on the direction of Nucor i.e., Nucor and Triunfo Participaes go up and down completely randomly.

Pair Corralation between Nucor and Triunfo Participaes

Assuming the 90 days trading horizon Nucor is expected to under-perform the Triunfo Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Nucor is 1.05 times less risky than Triunfo Participaes. The stock trades about -0.06 of its potential returns per unit of risk. The Triunfo Participaes e is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Triunfo Participaes e on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Triunfo Participaes e or generate 0.0% return on investment over 90 days.

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

Nucor  vs.  Triunfo Participaes e

Nucor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Triunfo Participaes

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triunfo Participaes e are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Triunfo Participaes 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 Nucor and Triunfo Participaes

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

The idea behind Nucor and Triunfo Participaes e 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.