Correlation Between Companhia Siderrgica and Lojas Renner

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

Diversification Opportunities for Companhia Siderrgica and Lojas Renner

-0.71

Correlation Coefficient

Companhia Siderrgica  Lojas Renner

Pay attention - limited upside

The 3 months correlation between Companhia and Lojas is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Lojas Renner SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Renner 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 Lojas Renner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Renner SA has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Lojas Renner go up and down completely randomly.

Pair Corralation between Companhia Siderrgica and Lojas Renner

Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to under-perform the Lojas Renner. In addition to that, Companhia Siderrgica is 1.16 times more volatile than Lojas Renner SA. It trades about -0.06 of its total potential returns per unit of risk. Lojas Renner SA is currently generating about 0.25 per unit of volatility. If you would invest  1,268  in Lojas Renner SA on April 20, 2025 and sell it today you would earn a total of  505.00  from holding Lojas Renner SA or generate 39.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Companhia Siderrgica Nacional  vs.  Lojas Renner SA

Companhia Siderrgica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia Siderrgica Nacional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lojas Renner SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lojas Renner SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lojas Renner unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Companhia Siderrgica and Lojas Renner

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

The idea behind Companhia Siderrgica Nacional and Lojas Renner 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.