Correlation Between CSN Minerao and Neogrid Participaes
Can any of the company-specific risk be diversified away by investing in both CSN Minerao and Neogrid Participaes 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 CSN Minerao and Neogrid Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSN Minerao SA and Neogrid Participaes SA, you can compare the effects of market volatilities on CSN Minerao and Neogrid Participaes 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 CSN Minerao with a short position of Neogrid Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSN Minerao and Neogrid Participaes.
Diversification Opportunities for CSN Minerao and Neogrid Participaes
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSN and Neogrid is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CSN Minerao SA and Neogrid Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogrid Participaes and CSN Minerao 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 CSN Minerao SA are associated (or correlated) with Neogrid Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogrid Participaes has no effect on the direction of CSN Minerao i.e., CSN Minerao and Neogrid Participaes go up and down completely randomly.
Pair Corralation between CSN Minerao and Neogrid Participaes
Assuming the 90 days trading horizon CSN Minerao SA is expected to under-perform the Neogrid Participaes. But the stock apears to be less risky and, when comparing its historical volatility, CSN Minerao SA is 36.51 times less risky than Neogrid Participaes. The stock trades about -0.03 of its potential returns per unit of risk. The Neogrid Participaes SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,050 in Neogrid Participaes SA on September 3, 2024 and sell it today you would lose (310.00) from holding Neogrid Participaes SA or give up 10.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.13% |
| Values | Daily Returns |
CSN Minerao SA vs. Neogrid Participaes SA
Performance |
| Timeline |
| CSN Minerao SA |
| Neogrid Participaes |
CSN Minerao and Neogrid Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSN Minerao and Neogrid Participaes
The main advantage of trading using opposite CSN Minerao and Neogrid Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSN Minerao position performs unexpectedly, Neogrid Participaes 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 Neogrid Participaes will offset losses from the drop in Neogrid Participaes' long position.| CSN Minerao vs. Razen SA | CSN Minerao vs. Caixa Seguridade Participaes | CSN Minerao vs. Mliuz SA | CSN Minerao vs. Companhia Paranaense de |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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