Correlation Between Companhia Siderrgica and Gafisa SA
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and Gafisa SA 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 Gafisa SA 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 Gafisa SA, you can compare the effects of market volatilities on Companhia Siderrgica and Gafisa SA 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 Gafisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Gafisa SA.
Diversification Opportunities for Companhia Siderrgica and Gafisa SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Gafisa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Gafisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gafisa SA 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 Gafisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gafisa SA has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Gafisa SA go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Gafisa SA
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to generate 0.62 times more return on investment than Gafisa SA. However, Companhia Siderrgica Nacional is 1.61 times less risky than Gafisa SA. It trades about -0.07 of its potential returns per unit of risk. Gafisa SA is currently generating about -0.24 per unit of risk. If you would invest 913.00 in Companhia Siderrgica Nacional on April 23, 2025 and sell it today you would lose (114.00) from holding Companhia Siderrgica Nacional or give up 12.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Companhia Siderrgica Nacional vs. Gafisa SA
Performance |
Timeline |
Companhia Siderrgica |
Gafisa SA |
Companhia Siderrgica and Gafisa SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Companhia Siderrgica and Gafisa SA
The main advantage of trading using opposite Companhia Siderrgica and Gafisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, Gafisa SA 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 Gafisa SA will offset losses from the drop in Gafisa SA's long position.Companhia Siderrgica vs. Take Two Interactive Software | Companhia Siderrgica vs. Cognizant Technology Solutions | Companhia Siderrgica vs. G2D Investments | Companhia Siderrgica vs. Unity Software |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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