Correlation Between Usinas Siderurgicas and Mesabi Trust

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

Diversification Opportunities for Usinas Siderurgicas and Mesabi Trust

0.65

Correlation Coefficient

Usinas Siderurgicas  Mesabi Trust

Poor diversification

The 3 months correlation between Usinas and Mesabi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderurgicas de and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust 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 Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Usinas Siderurgicas i.e., Usinas Siderurgicas and Mesabi Trust go up and down completely randomly.

Pair Corralation between Usinas Siderurgicas and Mesabi Trust

Assuming the 90 days horizon Usinas Siderurgicas is expected to generate 1.27 times less return on investment than Mesabi Trust. In addition to that, Usinas Siderurgicas is 1.07 times more volatile than Mesabi Trust. It trades about 0.06 of its total potential returns per unit of risk. Mesabi Trust is currently generating about 0.08 per unit of volatility. If you would invest  2,317  in Mesabi Trust on December 28, 2024 and sell it today you would earn a total of  384.00  from holding Mesabi Trust or generate 16.57% return on investment over 90 days.

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

Usinas Siderurgicas de  vs.  Mesabi Trust

Usinas Siderurgicas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderurgicas de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Usinas Siderurgicas showed solid returns over the last few months and may actually be approaching a breakup point.

Mesabi Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Usinas Siderurgicas and Mesabi Trust

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

The idea behind Usinas Siderurgicas de and Mesabi Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.