Correlation Between Usinas Siderrgicas and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Usinas Siderrgicas and Companhia Paranaense 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 Companhia Paranaense 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 Companhia Paranaense de, you can compare the effects of market volatilities on Usinas Siderrgicas and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderrgicas and Companhia Paranaense.
Diversification Opportunities for Usinas Siderrgicas and Companhia Paranaense
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Usinas and Companhia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderrgicas de and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Usinas Siderrgicas i.e., Usinas Siderrgicas and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Usinas Siderrgicas and Companhia Paranaense
Assuming the 90 days trading horizon Usinas Siderrgicas de is expected to generate 1.94 times more return on investment than Companhia Paranaense. However, Usinas Siderrgicas is 1.94 times more volatile than Companhia Paranaense de. It trades about 0.03 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.11 per unit of risk. If you would invest 591.00 in Usinas Siderrgicas de on September 11, 2024 and sell it today you would earn a total of 21.00 from holding Usinas Siderrgicas de or generate 3.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Usinas Siderrgicas de vs. Companhia Paranaense de
Performance |
Timeline |
Usinas Siderrgicas |
Companhia Paranaense |
Usinas Siderrgicas and Companhia Paranaense Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Usinas Siderrgicas and Companhia Paranaense
The main advantage of trading using opposite Usinas Siderrgicas and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderrgicas position performs unexpectedly, Companhia Paranaense 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 Paranaense will offset losses from the drop in Companhia Paranaense'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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