Correlation Between Bradespar and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Bradespar and Gerdau 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 Bradespar and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bradespar SA and Gerdau SA, you can compare the effects of market volatilities on Bradespar and Gerdau 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 Bradespar with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bradespar and Gerdau SA.
Diversification Opportunities for Bradespar and Gerdau SA
Significant diversification
The 3 months correlation between Bradespar and Gerdau is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bradespar SA and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA and Bradespar 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 Bradespar SA are associated (or correlated) with Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA has no effect on the direction of Bradespar i.e., Bradespar and Gerdau SA go up and down completely randomly.
Pair Corralation between Bradespar and Gerdau SA
Assuming the 90 days trading horizon Bradespar SA is expected to under-perform the Gerdau SA. But the stock apears to be less risky and, when comparing its historical volatility, Bradespar SA is 2.17 times less risky than Gerdau SA. The stock trades about -0.17 of its potential returns per unit of risk. The Gerdau SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,729 in Gerdau SA on August 27, 2024 and sell it today you would earn a total of 221.00 from holding Gerdau SA or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bradespar SA vs. Gerdau SA
Performance |
| Timeline |
| Bradespar SA |
| Gerdau SA |
Bradespar and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bradespar and Gerdau SA
The main advantage of trading using opposite Bradespar and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bradespar position performs unexpectedly, Gerdau 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| Bradespar vs. Fras le SA | Bradespar vs. Clave Indices De | Bradespar vs. BTG Pactual Logstica | Bradespar vs. Telefonaktiebolaget LM Ericsson |
| Gerdau SA vs. Usinas Siderrgicas de | Gerdau SA vs. Metalurgica Gerdau SA | Gerdau SA vs. Gerdau SA | Gerdau SA vs. Companhia Siderrgica Nacional |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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