Correlation Between G2D Investments and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both G2D Investments 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 G2D Investments and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G2D Investments and Metalurgica Gerdau SA, you can compare the effects of market volatilities on G2D Investments 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 G2D Investments with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of G2D Investments and Metalurgica Gerdau.
Diversification Opportunities for G2D Investments and Metalurgica Gerdau
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between G2D and Metalurgica is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding G2D Investments and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and G2D Investments 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 G2D Investments 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 G2D Investments i.e., G2D Investments and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between G2D Investments and Metalurgica Gerdau
Assuming the 90 days trading horizon G2D Investments is expected to under-perform the Metalurgica Gerdau. In addition to that, G2D Investments is 1.3 times more volatile than Metalurgica Gerdau SA. It trades about -0.12 of its total potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.11 per unit of volatility. If you would invest 1,052 in Metalurgica Gerdau SA on September 12, 2024 and sell it today you would earn a total of 128.00 from holding Metalurgica Gerdau SA or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G2D Investments vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| G2D Investments |
| Metalurgica Gerdau |
G2D Investments and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G2D Investments and Metalurgica Gerdau
The main advantage of trading using opposite G2D Investments and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G2D Investments 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.| G2D Investments vs. Tres Tentos Agroindustrial | G2D Investments vs. Nordon Indstrias Metalrgicas | G2D Investments vs. Multilaser Industrial SA | G2D Investments vs. Palantir Technologies |
| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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