Correlation Between Usinas Siderurgicas and Commercial Metals

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

Diversification Opportunities for Usinas Siderurgicas and Commercial Metals

-0.49

Correlation Coefficient

Usinas Siderurgicas  Commercial Metals

Very good diversification

The 3 months correlation between Usinas and Commercial is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderurgicas de and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals 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 Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Usinas Siderurgicas i.e., Usinas Siderurgicas and Commercial Metals go up and down completely randomly.

Pair Corralation between Usinas Siderurgicas and Commercial Metals

Assuming the 90 days horizon Usinas Siderurgicas de is expected to under-perform the Commercial Metals. In addition to that, Usinas Siderurgicas is 1.76 times more volatile than Commercial Metals. It trades about -0.01 of its total potential returns per unit of risk. Commercial Metals is currently generating about 0.08 per unit of volatility. If you would invest  5,130  in Commercial Metals on September 17, 2024 and sell it today you would earn a total of  591.00  from holding Commercial Metals or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Usinas Siderurgicas de  vs.  Commercial Metals

Usinas Siderurgicas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usinas Siderurgicas de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Usinas Siderurgicas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Commercial Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Commercial Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Usinas Siderurgicas and Commercial Metals

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

The idea behind Usinas Siderurgicas de and Commercial Metals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.