Correlation Between TechnipFMC Plc and Companhia Siderrgica

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

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

Diversification Opportunities for TechnipFMC Plc and Companhia Siderrgica

-0.23

Correlation Coefficient

TechnipFMC Plc  Companhia Siderrgica

Very good diversification

The 3 months correlation between TechnipFMC and Companhia is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and TechnipFMC Plc 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 TechnipFMC plc are associated (or correlated) with Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and Companhia Siderrgica go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and Companhia Siderrgica

Assuming the 90 days trading horizon TechnipFMC plc is expected to generate 0.57 times more return on investment than Companhia Siderrgica. However, TechnipFMC plc is 1.75 times less risky than Companhia Siderrgica. It trades about -0.01 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.54 per unit of risk. If you would invest  19,208  in TechnipFMC plc on October 6, 2024 and sell it today you would lose (129.00) from holding TechnipFMC plc or give up 0.67% of portfolio value over 90 days.

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

TechnipFMC plc  vs.  Companhia Siderrgica Nacional

TechnipFMC plc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, TechnipFMC Plc sustained solid returns over the last few months and may actually be approaching a breakup point.

Companhia Siderrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Siderrgica 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TechnipFMC Plc and Companhia Siderrgica

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

The idea behind TechnipFMC plc and Companhia Siderrgica Nacional 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.