Correlation Between Gerdau SA and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Ternium SA 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 Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and Ternium SA, you can compare the effects of market volatilities on Gerdau SA and Ternium SA 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Ternium SA.
Diversification Opportunities for Gerdau SA and Ternium SA
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gerdau and Ternium is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and Ternium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA 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 are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA has no effect on the direction of Gerdau SA i.e., Gerdau SA and Ternium SA go up and down completely randomly.
Pair Corralation between Gerdau SA and Ternium SA
Assuming the 90 days trading horizon Gerdau SA is expected to generate 1.19 times more return on investment than Ternium SA. However, Gerdau SA is 1.19 times more volatile than Ternium SA. It trades about 0.25 of its potential returns per unit of risk. Ternium SA is currently generating about 0.01 per unit of risk. If you would invest 6,295 in Gerdau SA on September 2, 2024 and sell it today you would earn a total of 805.00 from holding Gerdau SA or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Gerdau SA vs. Ternium SA
Performance |
| Timeline |
| Gerdau SA |
| Ternium SA |
Gerdau SA and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Ternium SA
The main advantage of trading using opposite Gerdau SA and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.The idea behind Gerdau SA and Ternium SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ternium SA vs. Taiwan Semiconductor Manufacturing | Ternium SA vs. Cognizant Technology Solutions | Ternium SA vs. Delta Air Lines | Ternium SA vs. McEwen Mining |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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