Correlation Between Usinas Siderrgicas and Nucor

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

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

Diversification Opportunities for Usinas Siderrgicas and Nucor

0.7

Correlation Coefficient

Usinas Siderrgicas  Nucor

Poor diversification

The 3 months correlation between Usinas and Nucor is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderrgicas de and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor and Usinas Siderrgicas 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 Usinas Siderrgicas de are associated (or correlated) with Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of Usinas Siderrgicas i.e., Usinas Siderrgicas and Nucor go up and down completely randomly.

Pair Corralation between Usinas Siderrgicas and Nucor

Assuming the 90 days trading horizon Usinas Siderrgicas de is expected to generate 0.64 times more return on investment than Nucor. However, Usinas Siderrgicas de is 1.57 times less risky than Nucor. It trades about -0.1 of its potential returns per unit of risk. Nucor is currently generating about -0.06 per unit of risk. If you would invest  591.00  in Usinas Siderrgicas de on October 8, 2024 and sell it today you would lose (81.00) from holding Usinas Siderrgicas de or give up 13.71% of portfolio value over 90 days.

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

Usinas Siderrgicas de  vs.  Nucor

Usinas Siderrgicas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usinas Siderrgicas de 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nucor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Usinas Siderrgicas and Nucor

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

The idea behind Usinas Siderrgicas de and Nucor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.