Correlation Between Companhia Siderurgica and Usinas Siderurgicas

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

Diversification Opportunities for Companhia Siderurgica and Usinas Siderurgicas

0.57

Correlation Coefficient

Companhia Siderurgica  Usinas Siderurgicas

Very weak diversification

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

Pair Corralation between Companhia Siderurgica and Usinas Siderurgicas

Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to under-perform the Usinas Siderurgicas. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Siderurgica Nacional is 1.46 times less risky than Usinas Siderurgicas. The stock trades about -0.02 of its potential returns per unit of risk. The Usinas Siderurgicas de is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Usinas Siderurgicas de on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Usinas Siderurgicas de or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Companhia Siderurgica Nacional  vs.  Usinas Siderurgicas de

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 rather sound forward indicators, Companhia Siderurgica is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Usinas Siderurgicas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderurgicas de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Usinas Siderurgicas may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Companhia Siderurgica and Usinas Siderurgicas

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

The idea behind Companhia Siderurgica Nacional and Usinas Siderurgicas 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 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.