Correlation Between Usinas Siderrgicas and Lupatech

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

Diversification Opportunities for Usinas Siderrgicas and Lupatech

0.64

Correlation Coefficient

Usinas Siderrgicas  Lupatech

Poor diversification

The 3 months correlation between Usinas and Lupatech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderrgicas de and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech 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 Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Usinas Siderrgicas i.e., Usinas Siderrgicas and Lupatech go up and down completely randomly.

Pair Corralation between Usinas Siderrgicas and Lupatech

Assuming the 90 days trading horizon Usinas Siderrgicas de is expected to generate 0.86 times more return on investment than Lupatech. However, Usinas Siderrgicas de is 1.17 times less risky than Lupatech. It trades about 0.0 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.07 per unit of risk. If you would invest  553.00  in Usinas Siderrgicas de on September 21, 2024 and sell it today you would lose (11.00) from holding Usinas Siderrgicas de or give up 1.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Usinas Siderrgicas de  vs.  Lupatech SA

Usinas Siderrgicas

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Usinas Siderrgicas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Usinas Siderrgicas and Lupatech

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

The idea behind Usinas Siderrgicas de and Lupatech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.