Correlation Between Gerdau SA and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Algoma Steel 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 Algoma Steel 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 Algoma Steel Group, you can compare the effects of market volatilities on Gerdau SA and Algoma Steel 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 Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Algoma Steel.
Diversification Opportunities for Gerdau SA and Algoma Steel
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gerdau and Algoma is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group 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 Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Gerdau SA i.e., Gerdau SA and Algoma Steel go up and down completely randomly.
Pair Corralation between Gerdau SA and Algoma Steel
Considering the 90-day investment horizon Gerdau SA ADR is expected to under-perform the Algoma Steel. But the stock apears to be less risky and, when comparing its historical volatility, Gerdau SA ADR is 1.15 times less risky than Algoma Steel. The stock trades about 0.0 of its potential returns per unit of risk. The Algoma Steel Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 694.00 in Algoma Steel Group on August 31, 2024 and sell it today you would earn a total of 373.00 from holding Algoma Steel Group or generate 53.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerdau SA ADR vs. Algoma Steel Group
Performance |
| Timeline |
| Gerdau SA ADR |
| Algoma Steel Group |
Gerdau SA and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Algoma Steel
The main advantage of trading using opposite Gerdau SA and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel'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 |
| Algoma Steel vs. Nucor Corp | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. ArcelorMittal SA ADR | Algoma Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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