Correlation Between United States and Longvie SA

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

Diversification Opportunities for United States and Longvie SA

-0.67

Correlation Coefficient

United States  Longvie SA

Excellent diversification

The 3 months correlation between United and Longvie is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Longvie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longvie SA 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 Longvie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longvie SA has no effect on the direction of United States i.e., United States and Longvie SA go up and down completely randomly.

Pair Corralation between United States and Longvie SA

Given the investment horizon of 90 days United States Steel is expected to generate 1.0 times more return on investment than Longvie SA. However, United States Steel is 1.0 times less risky than Longvie SA. It trades about 0.25 of its potential returns per unit of risk. Longvie SA is currently generating about -0.09 per unit of risk. If you would invest  1,237,500  in United States Steel on December 29, 2024 and sell it today you would earn a total of  635,000  from holding United States Steel or generate 51.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

United States Steel  vs.  Longvie SA

United States Steel

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, United States sustained solid returns over the last few months and may actually be approaching a breakup point.

Longvie SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Longvie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with United States and Longvie SA

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

The idea behind United States Steel and Longvie SA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.