Correlation Between Usinas Siderrgicas and Iochpe Maxion
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.0% |
Values | Daily Returns |
Usinas Siderrgicas de vs. Iochpe Maxion SA
Performance |
Timeline |
Usinas Siderrgicas |
Iochpe Maxion SA |
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.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 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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