Correlation Between Companhia Siderrgica and JBS SA
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and JBS 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 Companhia Siderrgica and JBS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Siderrgica Nacional and JBS SA, you can compare the effects of market volatilities on Companhia Siderrgica and JBS 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 Companhia Siderrgica with a short position of JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and JBS SA.
Diversification Opportunities for Companhia Siderrgica and JBS SA
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Companhia and JBS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Companhia Siderrgica 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 Companhia Siderrgica Nacional are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and JBS SA go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and JBS SA
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to under-perform the JBS SA. In addition to that, Companhia Siderrgica is 2.21 times more volatile than JBS SA. It trades about -0.17 of its total potential returns per unit of risk. JBS SA is currently generating about -0.26 per unit of volatility. If you would invest 3,719 in JBS SA on October 26, 2024 and sell it today you would lose (285.00) from holding JBS SA or give up 7.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. JBS SA
Performance |
| Timeline |
| Companhia Siderrgica |
| JBS SA |
Companhia Siderrgica and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and JBS SA
The main advantage of trading using opposite Companhia Siderrgica and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, JBS 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 JBS SA will offset losses from the drop in JBS SA's long position.| Companhia Siderrgica vs. Verizon Communications | Companhia Siderrgica vs. Fresenius Medical Care | Companhia Siderrgica vs. Charter Communications | Companhia Siderrgica vs. T Mobile |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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