Correlation Between Gerdau SA and Grupo Simec
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Grupo Simec 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 Grupo Simec 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 Grupo Simec SAB, you can compare the effects of market volatilities on Gerdau SA and Grupo Simec 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 Grupo Simec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Grupo Simec.
Diversification Opportunities for Gerdau SA and Grupo Simec
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gerdau and Grupo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Grupo Simec SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Simec SAB 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 Grupo Simec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Simec SAB has no effect on the direction of Gerdau SA i.e., Gerdau SA and Grupo Simec go up and down completely randomly.
Pair Corralation between Gerdau SA and Grupo Simec
Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 1.41 times more return on investment than Grupo Simec. However, Gerdau SA is 1.41 times more volatile than Grupo Simec SAB. It trades about 0.15 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about 0.08 per unit of risk. If you would invest 308.00 in Gerdau SA ADR on September 2, 2024 and sell it today you would earn a total of 28.00 from holding Gerdau SA ADR or generate 9.09% 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. Grupo Simec SAB
Performance |
| Timeline |
| Gerdau SA ADR |
| Grupo Simec SAB |
Gerdau SA and Grupo Simec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Grupo Simec
The main advantage of trading using opposite Gerdau SA and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Grupo Simec 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 Grupo Simec will offset losses from the drop in Grupo Simec'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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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