Correlation Between Companhia Siderurgica and Aperam PK

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

By analyzing existing cross correlation between Companhia Siderurgica Nacional and Aperam PK, you can compare the effects of market volatilities on Companhia Siderurgica and Aperam PK 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 Companhia Siderurgica with a short position of Aperam PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderurgica and Aperam PK.

Diversification Opportunities for Companhia Siderurgica and Aperam PK

0.56

Correlation Coefficient

Companhia Siderurgica  Aperam PK

Very weak diversification

The 3 months correlation between Companhia and Aperam is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderurgica Nacional and Aperam PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam PK and Companhia Siderurgica 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 Companhia Siderurgica Nacional are associated (or correlated) with Aperam PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam PK has no effect on the direction of Companhia Siderurgica i.e., Companhia Siderurgica and Aperam PK go up and down completely randomly.

Pair Corralation between Companhia Siderurgica and Aperam PK

Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to under-perform the Aperam PK. In addition to that, Companhia Siderurgica is 1.16 times more volatile than Aperam PK. It trades about -0.39 of its total potential returns per unit of risk. Aperam PK is currently generating about -0.23 per unit of volatility. If you would invest  2,994  in Aperam PK on October 15, 2024 and sell it today you would lose (371.00) from holding Aperam PK or give up 12.39% of portfolio value over 90 days.

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

Companhia Siderurgica Nacional  vs.  Aperam PK

Companhia Siderurgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Siderurgica Nacional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aperam PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperam PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Companhia Siderurgica and Aperam PK

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

The idea behind Companhia Siderurgica Nacional and Aperam PK 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.