Correlation Between Cia De and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Cia De 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 Cia De and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cia de Ferro and Gerdau SA, you can compare the effects of market volatilities on Cia De 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 Cia De with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and Gerdau SA.
Diversification Opportunities for Cia De and Gerdau SA
Excellent diversification
The 3 months correlation between Cia and Gerdau is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Ferro and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA and Cia De 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 Cia de Ferro 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 Cia De i.e., Cia De and Gerdau SA go up and down completely randomly.
Pair Corralation between Cia De and Gerdau SA
Assuming the 90 days trading horizon Cia de Ferro is expected to generate 31.75 times more return on investment than Gerdau SA. However, Cia De is 31.75 times more volatile than Gerdau SA. It trades about 0.18 of its potential returns per unit of risk. Gerdau SA is currently generating about 0.02 per unit of risk. If you would invest 6,005 in Cia de Ferro on August 30, 2024 and sell it today you would lose (4,726) from holding Cia de Ferro or give up 78.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.2% |
| Values | Daily Returns |
Cia de Ferro vs. Gerdau SA
Performance |
| Timeline |
| Cia de Ferro |
| Gerdau SA |
Cia De and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cia De and Gerdau SA
The main advantage of trading using opposite Cia De and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De 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.| Cia De vs. Cia de Ferro | Cia De vs. Metalurgica Gerdau SA | Cia De vs. Unipar Carbocloro SA | Cia De vs. Fras le SA |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |