Correlation Between Usinas Siderurgicas and Companhia Siderurgica
Can any of the company-specific risk be diversified away by investing in both Usinas Siderurgicas and Companhia Siderurgica 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 Siderurgicas and Companhia Siderurgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Usinas Siderurgicas de and Companhia Siderurgica Nacional, you can compare the effects of market volatilities on Usinas Siderurgicas and Companhia Siderurgica 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 Siderurgicas with a short position of Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderurgicas and Companhia Siderurgica.
Diversification Opportunities for Usinas Siderurgicas and Companhia Siderurgica
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Usinas and Companhia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderurgicas de and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica and Usinas Siderurgicas 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 Siderurgicas de are associated (or correlated) with Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of Usinas Siderurgicas i.e., Usinas Siderurgicas and Companhia Siderurgica go up and down completely randomly.
Pair Corralation between Usinas Siderurgicas and Companhia Siderurgica
Assuming the 90 days horizon Usinas Siderurgicas de is expected to under-perform the Companhia Siderurgica. In addition to that, Usinas Siderurgicas is 1.55 times more volatile than Companhia Siderurgica Nacional. It trades about -0.07 of its total potential returns per unit of risk. Companhia Siderurgica Nacional is currently generating about -0.04 per unit of volatility. If you would invest 207.00 in Companhia Siderurgica Nacional on August 31, 2024 and sell it today you would lose (7.00) from holding Companhia Siderurgica Nacional or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Usinas Siderurgicas de vs. Companhia Siderurgica Nacional
Performance |
| Timeline |
| Usinas Siderurgicas |
| Companhia Siderurgica |
Usinas Siderurgicas and Companhia Siderurgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Usinas Siderurgicas and Companhia Siderurgica
The main advantage of trading using opposite Usinas Siderurgicas and Companhia Siderurgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderurgicas position performs unexpectedly, Companhia Siderurgica 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 Siderurgica will offset losses from the drop in Companhia Siderurgica's long position.| Usinas Siderurgicas vs. Olympic Steel | Usinas Siderurgicas vs. Mesabi Trust | Usinas Siderurgicas vs. Universal Stainless Alloy | Usinas Siderurgicas vs. Outokumpu Oyj ADR |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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