Correlation Between United States and Cia De

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

By analyzing existing cross correlation between United States Steel and Cia de Ferro, you can compare the effects of market volatilities on United States and Cia De 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 United States with a short position of Cia De. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Cia De.

Diversification Opportunities for United States and Cia De

0.07

Correlation Coefficient

United States  Cia De

Significant diversification

The 3 months correlation between United and Cia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Cia de Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia de Ferro and United States 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 United States Steel are associated (or correlated) with Cia De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia de Ferro has no effect on the direction of United States i.e., United States and Cia De go up and down completely randomly.

Pair Corralation between United States and Cia De

Assuming the 90 days trading horizon United States Steel is expected to generate 0.62 times more return on investment than Cia De. However, United States Steel is 1.62 times less risky than Cia De. It trades about 0.2 of its potential returns per unit of risk. Cia de Ferro is currently generating about 0.03 per unit of risk. If you would invest  19,173  in United States Steel on December 30, 2024 and sell it today you would earn a total of  5,489  from holding United States Steel or generate 28.63% return on investment over 90 days.

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

United States Steel  vs.  Cia de Ferro

United States Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United States sustained solid returns over the last few months and may actually be approaching a breakup point.

Cia de Ferro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cia de Ferro are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cia De is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United States and Cia De

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

The idea behind United States Steel and Cia de Ferro 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.