Correlation Between Usinas Siderrgicas and Embraer SA
Can any of the company-specific risk be diversified away by investing in both Usinas Siderrgicas and Embraer SA 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 Embraer SA 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 Embraer SA, you can compare the effects of market volatilities on Usinas Siderrgicas and Embraer SA 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 Embraer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderrgicas and Embraer SA.
Diversification Opportunities for Usinas Siderrgicas and Embraer SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Usinas and Embraer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderrgicas de and Embraer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embraer SA 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 Embraer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embraer SA has no effect on the direction of Usinas Siderrgicas i.e., Usinas Siderrgicas and Embraer SA go up and down completely randomly.
Pair Corralation between Usinas Siderrgicas and Embraer SA
Assuming the 90 days trading horizon Usinas Siderrgicas de is expected to generate 1.66 times more return on investment than Embraer SA. However, Usinas Siderrgicas is 1.66 times more volatile than Embraer SA. It trades about 0.15 of its potential returns per unit of risk. Embraer SA is currently generating about 0.15 per unit of risk. If you would invest 509.00 in Usinas Siderrgicas de on November 5, 2024 and sell it today you would earn a total of 42.00 from holding Usinas Siderrgicas de or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Usinas Siderrgicas de vs. Embraer SA
Performance |
| Timeline |
| Usinas Siderrgicas |
| Embraer SA |
Usinas Siderrgicas and Embraer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Usinas Siderrgicas and Embraer SA
The main advantage of trading using opposite Usinas Siderrgicas and Embraer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderrgicas position performs unexpectedly, Embraer SA 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 Embraer SA will offset losses from the drop in Embraer SA'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 |
| Embraer SA vs. Gol Linhas Areas | Embraer SA vs. Gerdau SA | Embraer SA vs. Companhia Siderrgica Nacional | Embraer SA vs. Usinas Siderrgicas de |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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