Correlation Between BB Seguridade and CSN Minerao
Can any of the company-specific risk be diversified away by investing in both BB Seguridade and CSN Minerao 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 BB Seguridade and CSN Minerao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Seguridade Participacoes and CSN Minerao SA, you can compare the effects of market volatilities on BB Seguridade and CSN Minerao 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 BB Seguridade with a short position of CSN Minerao. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and CSN Minerao.
Diversification Opportunities for BB Seguridade and CSN Minerao
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BBSE3 and CSN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and CSN Minerao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSN Minerao SA and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with CSN Minerao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSN Minerao SA has no effect on the direction of BB Seguridade i.e., BB Seguridade and CSN Minerao go up and down completely randomly.
Pair Corralation between BB Seguridade and CSN Minerao
Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to generate 0.5 times more return on investment than CSN Minerao. However, BB Seguridade Participacoes is 1.99 times less risky than CSN Minerao. It trades about -0.09 of its potential returns per unit of risk. CSN Minerao SA is currently generating about -0.34 per unit of risk. If you would invest 3,427 in BB Seguridade Participacoes on September 1, 2024 and sell it today you would lose (74.00) from holding BB Seguridade Participacoes or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
BB Seguridade Participacoes vs. CSN Minerao SA
Performance |
| Timeline |
| BB Seguridade Partic |
| CSN Minerao SA |
BB Seguridade and CSN Minerao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Seguridade and CSN Minerao
The main advantage of trading using opposite BB Seguridade and CSN Minerao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, CSN Minerao 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 CSN Minerao will offset losses from the drop in CSN Minerao's long position.| BB Seguridade vs. Transmissora Aliana de | BB Seguridade vs. Banco do Brasil | BB Seguridade vs. Itasa Investimentos | BB Seguridade vs. Engie Brasil Energia |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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