Correlation Between Usinas Siderurgicas and Ta Chen

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

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

Diversification Opportunities for Usinas Siderurgicas and Ta Chen

0.52

Correlation Coefficient

Usinas Siderurgicas  Ta Chen

Very weak diversification

The 3 months correlation between Usinas and 2027 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderurgicas de and Ta Chen Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Chen Stainless and Usinas Siderurgicas 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 Siderurgicas de are associated (or correlated) with Ta Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Chen Stainless has no effect on the direction of Usinas Siderurgicas i.e., Usinas Siderurgicas and Ta Chen go up and down completely randomly.

Pair Corralation between Usinas Siderurgicas and Ta Chen

Assuming the 90 days horizon Usinas Siderurgicas is expected to generate 33.61 times less return on investment than Ta Chen. In addition to that, Usinas Siderurgicas is 1.37 times more volatile than Ta Chen Stainless. It trades about 0.01 of its total potential returns per unit of risk. Ta Chen Stainless is currently generating about 0.24 per unit of volatility. If you would invest  3,435  in Ta Chen Stainless on December 1, 2024 and sell it today you would earn a total of  1,450  from holding Ta Chen Stainless or generate 42.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Usinas Siderurgicas de  vs.  Ta Chen Stainless

Usinas Siderurgicas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Usinas Siderurgicas de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Usinas Siderurgicas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ta Chen Stainless

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ta Chen Stainless are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ta Chen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Usinas Siderurgicas and Ta Chen

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

The idea behind Usinas Siderurgicas de and Ta Chen Stainless 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.