Correlation Between Gerdau SA and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Nippon 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 Nippon 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 Nippon Steel, you can compare the effects of market volatilities on Gerdau SA and Nippon 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Nippon Steel.
Diversification Opportunities for Gerdau SA and Nippon Steel
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gerdau and Nippon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of Gerdau SA i.e., Gerdau SA and Nippon Steel go up and down completely randomly.
Pair Corralation between Gerdau SA and Nippon Steel
Considering the 90-day investment horizon Gerdau SA ADR is expected to under-perform the Nippon Steel. But the stock apears to be less risky and, when comparing its historical volatility, Gerdau SA ADR is 1.31 times less risky than Nippon Steel. The stock trades about -0.17 of its potential returns per unit of risk. The Nippon Steel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,010 in Nippon Steel on September 22, 2024 and sell it today you would lose (13.00) from holding Nippon Steel or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gerdau SA ADR vs. Nippon Steel
Performance |
| Timeline |
| Gerdau SA ADR |
| Nippon Steel |
Gerdau SA and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Nippon Steel
The main advantage of trading using opposite Gerdau SA and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Nippon 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 Nippon Steel will offset losses from the drop in Nippon 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 |
| Nippon Steel vs. Companhia Siderurgica Nacional | Nippon Steel vs. Olympic Steel | Nippon Steel vs. Universal Stainless Alloy | Nippon Steel vs. Usinas Siderurgicas 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |