Correlation Between Eucatex SA and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Eucatex SA 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 Eucatex SA and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eucatex SA Indstria and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Eucatex SA 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 Eucatex SA with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eucatex SA and Metalurgica Gerdau.
Diversification Opportunities for Eucatex SA and Metalurgica Gerdau
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eucatex and Metalurgica is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eucatex SA Indstria and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and Eucatex SA 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 Eucatex SA Indstria 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 Eucatex SA i.e., Eucatex SA and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Eucatex SA and Metalurgica Gerdau
Assuming the 90 days trading horizon Eucatex SA Indstria is expected to under-perform the Metalurgica Gerdau. But the preferred stock apears to be less risky and, when comparing its historical volatility, Eucatex SA Indstria is 2.16 times less risky than Metalurgica Gerdau. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Metalurgica Gerdau SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,008 in Metalurgica Gerdau SA on August 28, 2024 and sell it today you would earn a total of 91.00 from holding Metalurgica Gerdau SA or generate 9.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Eucatex SA Indstria vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Eucatex SA Indstria |
| Metalurgica Gerdau |
Eucatex SA and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eucatex SA and Metalurgica Gerdau
The main advantage of trading using opposite Eucatex SA and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eucatex SA 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.| Eucatex SA vs. Eternit SA | Eucatex SA vs. Cia de Ferro | Eucatex SA vs. Fras le SA | Eucatex SA vs. Iochpe Maxion SA |
| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de | Metalurgica Gerdau vs. Companhia Paranaense de |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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