Correlation Between Companhia Siderrgica and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Companhia Siderrgica and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Micron Technology.
Diversification Opportunities for Companhia Siderrgica and Micron Technology
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Companhia and Micron is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Micron Technology go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Micron Technology
Assuming the 90 days trading horizon Companhia Siderrgica is expected to generate 27.93 times less return on investment than Micron Technology. But when comparing it to its historical volatility, Companhia Siderrgica Nacional is 1.05 times less risky than Micron Technology. It trades about 0.0 of its potential returns per unit of risk. Micron Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 114,693 in Micron Technology on September 9, 2024 and sell it today you would earn a total of 89,507 from holding Micron Technology or generate 78.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. Micron Technology
Performance |
| Timeline |
| Companhia Siderrgica |
| Micron Technology |
Companhia Siderrgica and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and Micron Technology
The main advantage of trading using opposite Companhia Siderrgica and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Companhia Siderrgica vs. Steel Dynamics | Companhia Siderrgica vs. Gerdau SA | Companhia Siderrgica vs. Ternium SA | Companhia Siderrgica vs. United States Steel |
| Micron Technology vs. NVIDIA | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. QUALCOMM Incorporated | Micron Technology vs. Intel |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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