Correlation Between United States and Cemepe Investimentos

Can any of the company-specific risk be diversified away by investing in both United States and Cemepe Investimentos 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 United States and Cemepe Investimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United States Steel and Cemepe Investimentos SA, you can compare the effects of market volatilities on United States and Cemepe Investimentos 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 United States with a short position of Cemepe Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Cemepe Investimentos.

Diversification Opportunities for United States and Cemepe Investimentos

0.44

Correlation Coefficient

United States  Cemepe Investimentos

Very weak diversification

The 3 months correlation between United and Cemepe is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Cemepe Investimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemepe Investimentos and United States 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 United States Steel are associated (or correlated) with Cemepe Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemepe Investimentos has no effect on the direction of United States i.e., United States and Cemepe Investimentos go up and down completely randomly.

Pair Corralation between United States and Cemepe Investimentos

Assuming the 90 days trading horizon United States Steel is expected to generate 1.07 times more return on investment than Cemepe Investimentos. However, United States is 1.07 times more volatile than Cemepe Investimentos SA. It trades about 0.0 of its potential returns per unit of risk. Cemepe Investimentos SA is currently generating about -0.01 per unit of risk. If you would invest  20,012  in United States Steel on September 25, 2024 and sell it today you would lose (1,357) from holding United States Steel or give up 6.78% of portfolio value over 90 days.

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

United States Steel  vs.  Cemepe Investimentos SA

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cemepe Investimentos

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cemepe Investimentos SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cemepe Investimentos may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with United States and Cemepe Investimentos

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

The idea behind United States Steel and Cemepe Investimentos 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.