Correlation Between Gerdau SA and Aperam PK
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Aperam PK 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 Aperam PK 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 Aperam PK, you can compare the effects of market volatilities on Gerdau SA and Aperam PK 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 Aperam PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Aperam PK.
Diversification Opportunities for Gerdau SA and Aperam PK
Modest diversification
The 3 months correlation between Gerdau and Aperam is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Aperam PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam PK 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 Aperam PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam PK has no effect on the direction of Gerdau SA i.e., Gerdau SA and Aperam PK go up and down completely randomly.
Pair Corralation between Gerdau SA and Aperam PK
Considering the 90-day investment horizon Gerdau SA ADR is expected to under-perform the Aperam PK. But the stock apears to be less risky and, when comparing its historical volatility, Gerdau SA ADR is 1.38 times less risky than Aperam PK. The stock trades about -0.01 of its potential returns per unit of risk. The Aperam PK is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,438 in Aperam PK on August 27, 2024 and sell it today you would lose (472.00) from holding Aperam PK or give up 13.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.42% |
| Values | Daily Returns |
Gerdau SA ADR vs. Aperam PK
Performance |
| Timeline |
| Gerdau SA ADR |
| Aperam PK |
Gerdau SA and Aperam PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Aperam PK
The main advantage of trading using opposite Gerdau SA and Aperam PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Aperam PK 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 Aperam PK will offset losses from the drop in Aperam PK'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 |
| Aperam PK vs. Olympic Steel | Aperam PK vs. Mesabi Trust | Aperam PK vs. Universal Stainless Alloy | Aperam PK vs. POSCO Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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