Correlation Between Companhia Siderurgica and T REX

Can any of the company-specific risk be diversified away by investing in both Companhia Siderurgica and T REX 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 T REX 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 T REX 2X Inverse, you can compare the effects of market volatilities on Companhia Siderurgica and T REX 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 T REX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderurgica and T REX.

Diversification Opportunities for Companhia Siderurgica and T REX

-0.39

Correlation Coefficient

Companhia Siderurgica  T REX

Very good diversification

The 3 months correlation between Companhia and MSTZ is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderurgica Nacional and T REX 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T REX 2X 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 T REX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T REX 2X has no effect on the direction of Companhia Siderurgica i.e., Companhia Siderurgica and T REX go up and down completely randomly.

Pair Corralation between Companhia Siderurgica and T REX

Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to generate 0.29 times more return on investment than T REX. However, Companhia Siderurgica Nacional is 3.5 times less risky than T REX. It trades about 0.11 of its potential returns per unit of risk. T REX 2X Inverse is currently generating about -0.03 per unit of risk. If you would invest  144.00  in Companhia Siderurgica Nacional on December 27, 2024 and sell it today you would earn a total of  30.00  from holding Companhia Siderurgica Nacional or generate 20.83% return on investment over 90 days.

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

Companhia Siderurgica Nacional  vs.  T REX 2X Inverse

Companhia Siderurgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderurgica Nacional are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Companhia Siderurgica exhibited solid returns over the last few months and may actually be approaching a breakup point.

T REX 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T REX 2X Inverse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Companhia Siderurgica and T REX

The main advantage of trading using opposite Companhia Siderurgica and T REX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderurgica position performs unexpectedly, T REX 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 T REX will offset losses from the drop in T REX's long position.

The idea behind Companhia Siderurgica Nacional and T REX 2X Inverse 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.