Correlation Between Usinas Siderurgicas and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Usinas Siderurgicas and Commercial Metals 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 Commercial Metals 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 Commercial Metals, you can compare the effects of market volatilities on Usinas Siderurgicas and Commercial Metals 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 Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderurgicas and Commercial Metals.
Diversification Opportunities for Usinas Siderurgicas and Commercial Metals
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Usinas and Commercial is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderurgicas de and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals 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 Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Usinas Siderurgicas i.e., Usinas Siderurgicas and Commercial Metals go up and down completely randomly.
Pair Corralation between Usinas Siderurgicas and Commercial Metals
Assuming the 90 days horizon Usinas Siderurgicas de is expected to under-perform the Commercial Metals. In addition to that, Usinas Siderurgicas is 1.56 times more volatile than Commercial Metals. It trades about -0.08 of its total potential returns per unit of risk. Commercial Metals is currently generating about -0.05 per unit of volatility. If you would invest 5,478 in Commercial Metals on September 28, 2024 and sell it today you would lose (503.00) from holding Commercial Metals or give up 9.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
Usinas Siderurgicas de vs. Commercial Metals
Performance |
Timeline |
Usinas Siderurgicas |
Commercial Metals |
Usinas Siderurgicas and Commercial Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Usinas Siderurgicas and Commercial Metals
The main advantage of trading using opposite Usinas Siderurgicas and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderurgicas position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' long position.Usinas Siderurgicas vs. Olympic Steel | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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