Correlation Between Nucor and Usinas Siderrgicas

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

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

Diversification Opportunities for Nucor and Usinas Siderrgicas

-0.35

Correlation Coefficient

Nucor  Usinas Siderrgicas

Very good diversification

The 3 months correlation between Nucor and Usinas is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and Usinas Siderrgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderrgicas 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 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 Nucor i.e., Nucor and Usinas Siderrgicas go up and down completely randomly.

Pair Corralation between Nucor and Usinas Siderrgicas

Assuming the 90 days trading horizon Nucor is expected to generate 0.45 times more return on investment than Usinas Siderrgicas. However, Nucor is 2.25 times less risky than Usinas Siderrgicas. It trades about 0.14 of its potential returns per unit of risk. Usinas Siderrgicas de is currently generating about -0.24 per unit of risk. If you would invest  6,006  in Nucor on October 24, 2024 and sell it today you would earn a total of  329.00  from holding Nucor or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Nucor  vs.  Usinas Siderrgicas de

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 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.

Usinas Siderrgicas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderrgicas de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Usinas Siderrgicas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nucor and Usinas Siderrgicas

The main advantage of trading using opposite Nucor and Usinas Siderrgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor 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 Nucor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.