Correlation Between Companhia Siderurgica and Mesabi Trust

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

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

Diversification Opportunities for Companhia Siderurgica and Mesabi Trust

0.28

Correlation Coefficient

Companhia Siderurgica  Mesabi Trust

Modest diversification

The 3 months correlation between Companhia and Mesabi is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderurgica Nacional and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Companhia Siderurgica 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 Siderurgica Nacional are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Companhia Siderurgica i.e., Companhia Siderurgica and Mesabi Trust go up and down completely randomly.

Pair Corralation between Companhia Siderurgica and Mesabi Trust

Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to under-perform the Mesabi Trust. In addition to that, Companhia Siderurgica is 1.11 times more volatile than Mesabi Trust. It trades about -0.07 of its total potential returns per unit of risk. Mesabi Trust is currently generating about 0.06 per unit of volatility. If you would invest  2,778  in Mesabi Trust on May 6, 2025 and sell it today you would earn a total of  232.00  from holding Mesabi Trust or generate 8.35% return on investment over 90 days.

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

Companhia Siderurgica Nacional  vs.  Mesabi Trust

Companhia Siderurgica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia Siderurgica Nacional 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 forward indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mesabi Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Companhia Siderurgica and Mesabi Trust

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

The idea behind Companhia Siderurgica Nacional and Mesabi Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.