Correlation Between Usinas Siderrgicas and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Usinas Siderrgicas 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 Usinas Siderrgicas and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Usinas Siderrgicas de and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Usinas Siderrgicas 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 Usinas Siderrgicas with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderrgicas and Companhia Siderrgica.
Diversification Opportunities for Usinas Siderrgicas and Companhia Siderrgica
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Usinas and Companhia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderrgicas de and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and Usinas Siderrgicas 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 Usinas Siderrgicas de 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 Usinas Siderrgicas i.e., Usinas Siderrgicas and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Usinas Siderrgicas and Companhia Siderrgica
Assuming the 90 days trading horizon Usinas Siderrgicas de is expected to under-perform the Companhia Siderrgica. But the preferred stock apears to be less risky and, when comparing its historical volatility, Usinas Siderrgicas de is 1.13 times less risky than Companhia Siderrgica. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Companhia Siderrgica Nacional is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,166 in Companhia Siderrgica Nacional on August 23, 2024 and sell it today you would lose (20.00) from holding Companhia Siderrgica Nacional or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Usinas Siderrgicas de vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Usinas Siderrgicas |
| Companhia Siderrgica |
Usinas Siderrgicas and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Usinas Siderrgicas and Companhia Siderrgica
The main advantage of trading using opposite Usinas Siderrgicas and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderrgicas 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.| Usinas Siderrgicas vs. Companhia Siderrgica Nacional | Usinas Siderrgicas vs. Gerdau SA | Usinas Siderrgicas vs. Metalurgica Gerdau SA | Usinas Siderrgicas vs. Companhia Energtica de |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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