Correlation Between METISA Metalrgica and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica 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 METISA Metalrgica and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on METISA Metalrgica 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 METISA Metalrgica with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Companhia Siderrgica.
Diversification Opportunities for METISA Metalrgica and Companhia Siderrgica
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between METISA and Companhia is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Companhia Siderrgica
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 0.78 times more return on investment than Companhia Siderrgica. However, METISA Metalrgica Timboense is 1.28 times less risky than Companhia Siderrgica. It trades about -0.02 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.03 per unit of risk. If you would invest 3,620 in METISA Metalrgica Timboense on August 31, 2024 and sell it today you would lose (65.00) from holding METISA Metalrgica Timboense or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| METISA Metalrgica |
| Companhia Siderrgica |
METISA Metalrgica and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Companhia Siderrgica
The main advantage of trading using opposite METISA Metalrgica and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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.| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes | METISA Metalrgica vs. Indstrias Romi SA |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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