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 and Nippon Steel Corp, 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
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gerdau and Nippon is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel Corp 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 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 Corp 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
Assuming the 90 days trading horizon Gerdau SA is expected to generate 1.05 times more return on investment than Nippon Steel. However, Gerdau SA is 1.05 times more volatile than Nippon Steel Corp. It trades about 0.25 of its potential returns per unit of risk. Nippon Steel Corp is currently generating about 0.07 per unit of risk. If you would invest 1,674 in Gerdau SA on August 24, 2024 and sell it today you would earn a total of 225.00 from holding Gerdau SA or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
Gerdau SA vs. Nippon Steel Corp
Performance |
| Timeline |
| Gerdau SA |
| Nippon Steel Corp |
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 Siderrgicas de | Gerdau SA vs. Metalurgica Gerdau SA | Gerdau SA vs. Gerdau SA | Gerdau SA vs. Companhia Siderrgica Nacional |
| Nippon Steel vs. Olympic Steel | Nippon Steel vs. Mesabi Trust | Nippon Steel vs. Universal Stainless Alloy | Nippon Steel 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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