Correlation Between Grupo Carso and Companhia Siderrgica

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Can any of the company-specific risk be diversified away by investing in both Grupo Carso 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 Grupo Carso and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Carso SAB and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Grupo Carso 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 Grupo Carso with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and Companhia Siderrgica.

Diversification Opportunities for Grupo Carso and Companhia Siderrgica

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Grupo and Companhia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and Grupo Carso 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 Grupo Carso SAB 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 Grupo Carso i.e., Grupo Carso and Companhia Siderrgica go up and down completely randomly.

Pair Corralation between Grupo Carso and Companhia Siderrgica

Assuming the 90 days trading horizon Grupo Carso SAB is expected to generate 0.71 times more return on investment than Companhia Siderrgica. However, Grupo Carso SAB is 1.41 times less risky than Companhia Siderrgica. It trades about 0.04 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.09 per unit of risk. If you would invest  12,310  in Grupo Carso SAB on September 5, 2024 and sell it today you would earn a total of  346.00  from holding Grupo Carso SAB or generate 2.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Grupo Carso SAB  vs.  Companhia Siderrgica Nacional

 Performance 
       Timeline  
Grupo Carso SAB 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Carso may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Companhia Siderrgica 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderrgica Nacional are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Companhia Siderrgica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grupo Carso and Companhia Siderrgica Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Carso and Companhia Siderrgica

The main advantage of trading using opposite Grupo Carso and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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.
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The idea behind Grupo Carso SAB and Companhia Siderrgica Nacional pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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