Correlation Between Companhia Siderrgica and Unipar Carbocloro

Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and Unipar Carbocloro 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 Companhia Siderrgica and Unipar Carbocloro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Companhia Siderrgica Nacional and Unipar Carbocloro SA, you can compare the effects of market volatilities on Companhia Siderrgica and Unipar Carbocloro 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 Companhia Siderrgica with a short position of Unipar Carbocloro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Unipar Carbocloro.

Diversification Opportunities for Companhia Siderrgica and Unipar Carbocloro

-0.14

Correlation Coefficient

Companhia Siderrgica  Unipar Carbocloro

Good diversification

The 3 months correlation between Companhia and Unipar is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Unipar Carbocloro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipar Carbocloro and Companhia Siderrgica 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 Companhia Siderrgica Nacional are associated (or correlated) with Unipar Carbocloro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipar Carbocloro has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Unipar Carbocloro go up and down completely randomly.

Pair Corralation between Companhia Siderrgica and Unipar Carbocloro

Assuming the 90 days trading horizon Companhia Siderrgica is expected to generate 1.58 times less return on investment than Unipar Carbocloro. In addition to that, Companhia Siderrgica is 1.18 times more volatile than Unipar Carbocloro SA. It trades about 0.04 of its total potential returns per unit of risk. Unipar Carbocloro SA is currently generating about 0.07 per unit of volatility. If you would invest  4,590  in Unipar Carbocloro SA on September 5, 2024 and sell it today you would earn a total of  410.00  from holding Unipar Carbocloro SA or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Companhia Siderrgica Nacional  vs.  Unipar Carbocloro SA

Companhia Siderrgica

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderrgica Nacional are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Companhia Siderrgica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Unipar Carbocloro

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Unipar Carbocloro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Companhia Siderrgica and Unipar Carbocloro

The main advantage of trading using opposite Companhia Siderrgica and Unipar Carbocloro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, Unipar Carbocloro 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 Unipar Carbocloro will offset losses from the drop in Unipar Carbocloro's long position.

The idea behind Companhia Siderrgica Nacional and Unipar Carbocloro 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.