Correlation Between Companhia Siderrgica and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica and Metalurgica Gerdau 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA, you can compare the effects of market volatilities on Companhia Siderrgica and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Metalurgica Gerdau.
Diversification Opportunities for Companhia Siderrgica and Metalurgica Gerdau
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Metalurgica is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Companhia Siderrgica i.e., Companhia Siderrgica and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Metalurgica Gerdau
Assuming the 90 days trading horizon Companhia Siderrgica Nacional is expected to generate 1.92 times more return on investment than Metalurgica Gerdau. However, Companhia Siderrgica is 1.92 times more volatile than Metalurgica Gerdau SA. It trades about 0.14 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about -0.01 per unit of risk. If you would invest 842.00 in Companhia Siderrgica Nacional on November 2, 2024 and sell it today you would earn a total of 83.00 from holding Companhia Siderrgica Nacional or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Companhia Siderrgica |
| Metalurgica Gerdau |
Companhia Siderrgica and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and Metalurgica Gerdau
The main advantage of trading using opposite Companhia Siderrgica and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Companhia Siderrgica vs. Check Point Software | Companhia Siderrgica vs. DXC Technology | Companhia Siderrgica vs. METISA Metalrgica Timboense | Companhia Siderrgica vs. MAHLE Metal Leve |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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