Correlation Between Ferrum SA and United States
Can any of the company-specific risk be diversified away by investing in both Ferrum SA and United States 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 Ferrum SA and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrum SA and United States Steel, you can compare the effects of market volatilities on Ferrum SA and United States 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 Ferrum SA with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrum SA and United States.
Diversification Opportunities for Ferrum SA and United States
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ferrum and United is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ferrum SA and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Ferrum SA 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 Ferrum SA are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Ferrum SA i.e., Ferrum SA and United States go up and down completely randomly.
Pair Corralation between Ferrum SA and United States
Assuming the 90 days trading horizon Ferrum SA is expected to generate 0.58 times more return on investment than United States. However, Ferrum SA is 1.72 times less risky than United States. It trades about 0.29 of its potential returns per unit of risk. United States Steel is currently generating about -0.11 per unit of risk. If you would invest 3,875 in Ferrum SA on October 9, 2024 and sell it today you would earn a total of 445.00 from holding Ferrum SA or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrum SA vs. United States Steel
Performance |
| Timeline |
| Ferrum SA |
| United States Steel |
Ferrum SA and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrum SA and United States
The main advantage of trading using opposite Ferrum SA and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrum SA position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Ferrum SA vs. Edesa Holding SA | Ferrum SA vs. United States Steel | Ferrum SA vs. Capex SA | Ferrum SA vs. Pfizer Inc |
| United States vs. Agrometal SAI | United States vs. Harmony Gold Mining | United States vs. Compania de Transporte | United States vs. Telecom Argentina |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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