Correlation Between Gerdau SA and Allient
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Allient 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 Gerdau SA and Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA ADR and Allient, you can compare the effects of market volatilities on Gerdau SA and Allient 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 Gerdau SA with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Allient.
Diversification Opportunities for Gerdau SA and Allient
Average diversification
The 3 months correlation between Gerdau and Allient is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Gerdau 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 Gerdau SA ADR are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Gerdau SA i.e., Gerdau SA and Allient go up and down completely randomly.
Pair Corralation between Gerdau SA and Allient
Considering the 90-day investment horizon Gerdau SA ADR is expected to under-perform the Allient. But the stock apears to be less risky and, when comparing its historical volatility, Gerdau SA ADR is 1.3 times less risky than Allient. The stock trades about -0.14 of its potential returns per unit of risk. The Allient is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,361 in Allient on October 24, 2024 and sell it today you would earn a total of 302.00 from holding Allient or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerdau SA ADR vs. Allient
Performance |
| Timeline |
| Gerdau SA ADR |
| Allient |
Gerdau SA and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Allient
The main advantage of trading using opposite Gerdau SA and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO Holdings |
| Allient vs. Ralph Lauren Corp | Allient vs. Skechers USA | Allient vs. Columbia Sportswear | Allient vs. Gerdau SA ADR |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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