Correlation Between Electro Ao and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Electro Ao and Companhia Siderrgica 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 Electro Ao and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electro Ao Altona and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Electro Ao and Companhia Siderrgica 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 Electro Ao with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electro Ao and Companhia Siderrgica.
Diversification Opportunities for Electro Ao and Companhia Siderrgica
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electro and Companhia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Electro Ao Altona and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and Electro Ao 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 Electro Ao Altona are associated (or correlated) with Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Electro Ao i.e., Electro Ao and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Electro Ao and Companhia Siderrgica
Assuming the 90 days trading horizon Electro Ao Altona is expected to generate 0.79 times more return on investment than Companhia Siderrgica. However, Electro Ao Altona is 1.27 times less risky than Companhia Siderrgica. It trades about 0.16 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about 0.02 per unit of risk. If you would invest 1,323 in Electro Ao Altona on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Electro Ao Altona or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electro Ao Altona vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Electro Ao Altona |
| Companhia Siderrgica |
Electro Ao and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electro Ao and Companhia Siderrgica
The main advantage of trading using opposite Electro Ao and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electro Ao position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Electro Ao vs. Bemobi Mobile Tech | Electro Ao vs. Unity Software | Electro Ao vs. Deutsche Bank Aktiengesellschaft | Electro Ao vs. HDFC Bank Limited |
| Companhia Siderrgica vs. BrasilAgro Companhia | Companhia Siderrgica vs. Indstrias Romi SA | Companhia Siderrgica vs. JHSF Participaes SA | Companhia Siderrgica vs. Energisa SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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