Correlation Between Synalloy and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Synalloy and Ternium 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 Synalloy and Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synalloy and Ternium SA ADR, you can compare the effects of market volatilities on Synalloy and Ternium 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 Synalloy with a short position of Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synalloy and Ternium SA.
Diversification Opportunities for Synalloy and Ternium SA
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Synalloy and Ternium is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Synalloy and Ternium SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA ADR and Synalloy 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 Synalloy are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA ADR has no effect on the direction of Synalloy i.e., Synalloy and Ternium SA go up and down completely randomly.
Pair Corralation between Synalloy and Ternium SA
Given the investment horizon of 90 days Synalloy is expected to generate 1.33 times more return on investment than Ternium SA. However, Synalloy is 1.33 times more volatile than Ternium SA ADR. It trades about 0.02 of its potential returns per unit of risk. Ternium SA ADR is currently generating about -0.04 per unit of risk. If you would invest 1,053 in Synalloy on November 9, 2024 and sell it today you would earn a total of 62.00 from holding Synalloy or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synalloy vs. Ternium SA ADR
Performance |
| Timeline |
| Synalloy |
| Ternium SA ADR |
Synalloy and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synalloy and Ternium SA
The main advantage of trading using opposite Synalloy and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synalloy position performs unexpectedly, Ternium 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Synalloy vs. Grupo Simec SAB | Synalloy vs. Mesabi Trust | Synalloy vs. Algoma Steel Group | Synalloy vs. Aperam PK |
| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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