Correlation Between Celanese and Companhia Siderurgica

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

By analyzing existing cross correlation between Celanese and Companhia Siderurgica Nacional, you can compare the effects of market volatilities on Celanese and Companhia Siderurgica 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 Celanese with a short position of Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Companhia Siderurgica.

Diversification Opportunities for Celanese and Companhia Siderurgica

-0.2

Correlation Coefficient

Celanese  Companhia Siderurgica

Good diversification

The 3 months correlation between Celanese and Companhia is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica and Celanese 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 Celanese are associated (or correlated) with Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of Celanese i.e., Celanese and Companhia Siderurgica go up and down completely randomly.

Pair Corralation between Celanese and Companhia Siderurgica

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Companhia Siderurgica. In addition to that, Celanese is 1.4 times more volatile than Companhia Siderurgica Nacional. It trades about -0.13 of its total potential returns per unit of risk. Companhia Siderurgica Nacional is currently generating about 0.05 per unit of volatility. If you would invest  133.00  in Companhia Siderurgica Nacional on January 8, 2025 and sell it today you would earn a total of  10.00  from holding Companhia Siderurgica Nacional or generate 7.52% return on investment over 90 days.

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

Celanese  vs.  Companhia Siderurgica Nacional

Celanese

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Companhia Siderurgica

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderurgica Nacional are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Companhia Siderurgica may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Celanese and Companhia Siderurgica

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

The idea behind Celanese and Companhia Siderurgica Nacional 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..