Correlation Between Usinas Siderurgicas and Outokumpu Oyj

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

Diversification Opportunities for Usinas Siderurgicas and Outokumpu Oyj

0.23

Correlation Coefficient

Usinas Siderurgicas  Outokumpu Oyj

Modest diversification

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

Pair Corralation between Usinas Siderurgicas and Outokumpu Oyj

Assuming the 90 days horizon Usinas Siderurgicas de is expected to generate 3.36 times more return on investment than Outokumpu Oyj. However, Usinas Siderurgicas is 3.36 times more volatile than Outokumpu Oyj ADR. It trades about 0.0 of its potential returns per unit of risk. Outokumpu Oyj ADR is currently generating about -0.09 per unit of risk. If you would invest  112.00  in Usinas Siderurgicas de on September 3, 2024 and sell it today you would lose (6.00) from holding Usinas Siderurgicas de or give up 5.36% of portfolio value over 90 days.

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

Usinas Siderurgicas de  vs.  Outokumpu Oyj ADR

Usinas Siderurgicas

Risk-Adjusted Performance

0 of 100

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.

Outokumpu Oyj ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Outokumpu Oyj ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Usinas Siderurgicas and Outokumpu Oyj

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

The idea behind Usinas Siderurgicas de and Outokumpu Oyj ADR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.