Correlation Between Companhia Siderrgica and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica 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 Companhia Siderrgica and Gerdau SA 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 Gerdau SA, you can compare the effects of market volatilities on Companhia Siderrgica 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 Companhia Siderrgica with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Gerdau SA.
Diversification Opportunities for Companhia Siderrgica and Gerdau SA
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Companhia and Gerdau is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau 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 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 Companhia Siderrgica i.e., Companhia Siderrgica and Gerdau SA go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Gerdau SA
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to generate 1.64 times more return on investment than Gerdau SA. However, Companhia Siderrgica is 1.64 times more volatile than Gerdau SA. It trades about 0.12 of its potential returns per unit of risk. Gerdau SA is currently generating about 0.04 per unit of risk. If you would invest 813.00 in Companhia Siderrgica Nacional on November 18, 2024 and sell it today you would earn a total of 61.00 from holding Companhia Siderrgica Nacional or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. Gerdau SA
Performance |
| Timeline |
| Companhia Siderrgica |
| Gerdau SA |
Companhia Siderrgica and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and Gerdau SA
The main advantage of trading using opposite Companhia Siderrgica and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica 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.| Companhia Siderrgica vs. Check Point Software | Companhia Siderrgica vs. British American Tobacco | Companhia Siderrgica vs. Hospital Mater Dei | Companhia Siderrgica vs. CVS Health |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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