Correlation Between Gerdau SA and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Commercial Metals 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 Commercial Metals 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 Commercial Metals, you can compare the effects of market volatilities on Gerdau SA and Commercial Metals 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 Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Commercial Metals.
Diversification Opportunities for Gerdau SA and Commercial Metals
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gerdau and Commercial is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals 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 Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Gerdau SA i.e., Gerdau SA and Commercial Metals go up and down completely randomly.
Pair Corralation between Gerdau SA and Commercial Metals
Considering the 90-day investment horizon Gerdau SA is expected to generate 1.36 times less return on investment than Commercial Metals. In addition to that, Gerdau SA is 1.05 times more volatile than Commercial Metals. It trades about 0.1 of its total potential returns per unit of risk. Commercial Metals is currently generating about 0.15 per unit of volatility. If you would invest 4,740 in Commercial Metals on November 9, 2024 and sell it today you would earn a total of 274.00 from holding Commercial Metals or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Gerdau SA ADR vs. Commercial Metals
Performance |
| Timeline |
| Gerdau SA ADR |
| Commercial Metals |
Gerdau SA and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Commercial Metals
The main advantage of trading using opposite Gerdau SA and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' 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 |
| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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