Correlation Between Centrais Eltricas and Usinas Siderrgicas
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Usinas Siderrgicas 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 Centrais Eltricas and Usinas Siderrgicas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Eltricas de and Usinas Siderrgicas de, you can compare the effects of market volatilities on Centrais Eltricas and Usinas Siderrgicas 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 Centrais Eltricas with a short position of Usinas Siderrgicas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Usinas Siderrgicas.
Diversification Opportunities for Centrais Eltricas and Usinas Siderrgicas
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centrais and Usinas is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas de and Usinas Siderrgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderrgicas and Centrais Eltricas 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 Centrais Eltricas de are associated (or correlated) with Usinas Siderrgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderrgicas has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Usinas Siderrgicas go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Usinas Siderrgicas
Assuming the 90 days trading horizon Centrais Eltricas de is expected to generate 0.44 times more return on investment than Usinas Siderrgicas. However, Centrais Eltricas de is 2.25 times less risky than Usinas Siderrgicas. It trades about 0.08 of its potential returns per unit of risk. Usinas Siderrgicas de is currently generating about -0.02 per unit of risk. If you would invest 7,036 in Centrais Eltricas de on September 5, 2024 and sell it today you would earn a total of 1,069 from holding Centrais Eltricas de or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas de vs. Usinas Siderrgicas de
Performance |
| Timeline |
| Centrais Eltricas |
| Usinas Siderrgicas |
Centrais Eltricas and Usinas Siderrgicas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Usinas Siderrgicas
The main advantage of trading using opposite Centrais Eltricas and Usinas Siderrgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Usinas Siderrgicas 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 Usinas Siderrgicas will offset losses from the drop in Usinas Siderrgicas' long position.| Centrais Eltricas vs. Usinas Siderrgicas de | Centrais Eltricas vs. Companhia Siderrgica Nacional | Centrais Eltricas vs. Gerdau SA | Centrais Eltricas vs. Centrais Eltricas Brasileiras |
| Usinas Siderrgicas vs. Companhia Siderrgica Nacional | Usinas Siderrgicas vs. Gerdau SA | Usinas Siderrgicas vs. Metalurgica Gerdau SA | Usinas Siderrgicas vs. Companhia Energtica de |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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