Correlation Between Razen SA and CSN Minerao

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

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

Diversification Opportunities for Razen SA and CSN Minerao

-0.33

Correlation Coefficient

Razen SA  CSN Minerao

Very good diversification

The 3 months correlation between Razen and CSN is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Razen SA and CSN Minerao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSN Minerao SA and Razen 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 Razen SA are associated (or correlated) with CSN Minerao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSN Minerao SA has no effect on the direction of Razen SA i.e., Razen SA and CSN Minerao go up and down completely randomly.

Pair Corralation between Razen SA and CSN Minerao

Assuming the 90 days trading horizon Razen SA is expected to under-perform the CSN Minerao. But the stock apears to be less risky and, when comparing its historical volatility, Razen SA is 1.06 times less risky than CSN Minerao. The stock trades about -0.07 of its potential returns per unit of risk. The CSN Minerao SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  511.00  in CSN Minerao SA on December 30, 2024 and sell it today you would earn a total of  119.00  from holding CSN Minerao SA or generate 23.29% return on investment over 90 days.

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

Razen SA  vs.  CSN Minerao SA

Razen SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Razen SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CSN Minerao SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSN Minerao SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CSN Minerao unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Razen SA and CSN Minerao

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

The idea behind Razen SA and CSN Minerao SA 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 Valuation module to check real value of public entities based on technical and fundamental data.