Correlation Between Usinas Siderrgicas and Iochpe Maxion

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Can any of the company-specific risk be diversified away by investing in both Usinas Siderrgicas and Iochpe Maxion 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 Iochpe Maxion 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 Iochpe Maxion SA, you can compare the effects of market volatilities on Usinas Siderrgicas and Iochpe Maxion 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 Iochpe Maxion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderrgicas and Iochpe Maxion.

Diversification Opportunities for Usinas Siderrgicas and Iochpe Maxion

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Usinas and Iochpe is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderrgicas de and Iochpe Maxion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iochpe Maxion 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 Iochpe Maxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iochpe Maxion SA has no effect on the direction of Usinas Siderrgicas i.e., Usinas Siderrgicas and Iochpe Maxion go up and down completely randomly.

Pair Corralation between Usinas Siderrgicas and Iochpe Maxion

Assuming the 90 days trading horizon Usinas Siderrgicas is expected to generate 2.73 times less return on investment than Iochpe Maxion. In addition to that, Usinas Siderrgicas is 1.04 times more volatile than Iochpe Maxion SA. It trades about 0.0 of its total potential returns per unit of risk. Iochpe Maxion SA is currently generating about 0.01 per unit of volatility. If you would invest  1,181  in Iochpe Maxion SA on August 24, 2024 and sell it today you would lose (31.00) from holding Iochpe Maxion SA or give up 2.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.0%
ValuesDaily Returns

Usinas Siderrgicas de  vs.  Iochpe Maxion SA

 Performance 
       Timeline  
Usinas Siderrgicas 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Usinas Siderrgicas de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Iochpe Maxion SA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Iochpe Maxion SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Iochpe Maxion is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Usinas Siderrgicas and Iochpe Maxion Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Usinas Siderrgicas and Iochpe Maxion

The main advantage of trading using opposite Usinas Siderrgicas and Iochpe Maxion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderrgicas position performs unexpectedly, Iochpe Maxion 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 Iochpe Maxion will offset losses from the drop in Iochpe Maxion's long position.
The idea behind Usinas Siderrgicas de and Iochpe Maxion SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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