Correlation Between Companhia Siderrgica and First Majestic
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and First Majestic 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 Siderrgica and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Siderrgica Nacional and First Majestic Silver, you can compare the effects of market volatilities on Companhia Siderrgica and First Majestic 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 Siderrgica with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and First Majestic.
Diversification Opportunities for Companhia Siderrgica and First Majestic
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Companhia Siderrgica 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 Siderrgica Nacional are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and First Majestic go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and First Majestic
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to generate 2.2 times more return on investment than First Majestic. However, Companhia Siderrgica is 2.2 times more volatile than First Majestic Silver. It trades about 0.0 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.03 per unit of risk. If you would invest 3,939 in Companhia Siderrgica Nacional on September 3, 2024 and sell it today you would lose (154.00) from holding Companhia Siderrgica Nacional or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. First Majestic Silver
Performance |
| Timeline |
| Companhia Siderrgica |
| First Majestic Silver |
Companhia Siderrgica and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and First Majestic
The main advantage of trading using opposite Companhia Siderrgica and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Companhia Siderrgica vs. Cognizant Technology Solutions | Companhia Siderrgica vs. Micron Technology | Companhia Siderrgica vs. UnitedHealth Group Incorporated | Companhia Siderrgica vs. Ross Stores |
| First Majestic vs. Samsung Electronics Co | First Majestic vs. Southwest Airlines | First Majestic vs. Genworth Financial | First Majestic vs. UnitedHealth Group Incorporated |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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