Correlation Between GP Investments and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Companhia Siderrgica.
Diversification Opportunities for GP Investments and Companhia Siderrgica
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between GPIV33 and Companhia is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between GP Investments and Companhia Siderrgica
Assuming the 90 days trading horizon GP Investments is expected to under-perform the Companhia Siderrgica. But the stock apears to be less risky and, when comparing its historical volatility, GP Investments is 1.46 times less risky than Companhia Siderrgica. The stock trades about -0.07 of its potential returns per unit of risk. The Companhia Siderrgica Nacional is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 821.00 in Companhia Siderrgica Nacional on November 4, 2024 and sell it today you would earn a total of 88.00 from holding Companhia Siderrgica Nacional or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GP Investments vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| GP Investments |
| Companhia Siderrgica |
GP Investments and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Companhia Siderrgica
The main advantage of trading using opposite GP Investments and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. Omega Healthcare Investors, | GP Investments vs. Elevance Health, | GP Investments vs. Zoom Video Communications | GP Investments vs. Pure Storage, |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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