Correlation Between Companhia Siderurgica and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Companhia Siderurgica and POSCO Holdings 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 Companhia Siderurgica and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Siderurgica Nacional and POSCO Holdings, you can compare the effects of market volatilities on Companhia Siderurgica and POSCO Holdings 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 Companhia Siderurgica with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderurgica and POSCO Holdings.
Diversification Opportunities for Companhia Siderurgica and POSCO Holdings
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Companhia and POSCO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderurgica Nacional and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Companhia Siderurgica 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 Companhia Siderurgica Nacional are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Companhia Siderurgica i.e., Companhia Siderurgica and POSCO Holdings go up and down completely randomly.
Pair Corralation between Companhia Siderurgica and POSCO Holdings
Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to generate 0.98 times more return on investment than POSCO Holdings. However, Companhia Siderurgica Nacional is 1.02 times less risky than POSCO Holdings. It trades about -0.04 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.19 per unit of risk. If you would invest 207.00 in Companhia Siderurgica Nacional on August 31, 2024 and sell it today you would lose (7.00) from holding Companhia Siderurgica Nacional or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderurgica Nacional vs. POSCO Holdings
Performance |
| Timeline |
| Companhia Siderurgica |
| POSCO Holdings |
Companhia Siderurgica and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderurgica and POSCO Holdings
The main advantage of trading using opposite Companhia Siderurgica and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderurgica position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Companhia Siderurgica vs. Nucor Corp | Companhia Siderurgica vs. Steel Dynamics | Companhia Siderurgica vs. ArcelorMittal SA ADR | Companhia Siderurgica vs. Gerdau SA ADR |
| POSCO Holdings vs. Nucor Corp | POSCO Holdings vs. Steel Dynamics | POSCO Holdings vs. ArcelorMittal SA ADR | POSCO Holdings vs. Gerdau SA ADR |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |