Correlation Between Gerdau SA and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Voestalpine 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 Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and Voestalpine AG, you can compare the effects of market volatilities on Gerdau SA and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Voestalpine.
Diversification Opportunities for Gerdau SA and Voestalpine
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gerdau and Voestalpine is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of Gerdau SA i.e., Gerdau SA and Voestalpine go up and down completely randomly.
Pair Corralation between Gerdau SA and Voestalpine
Assuming the 90 days trading horizon Gerdau SA is expected to generate 0.79 times more return on investment than Voestalpine. However, Gerdau SA is 1.27 times less risky than Voestalpine. It trades about 0.05 of its potential returns per unit of risk. Voestalpine AG is currently generating about -0.05 per unit of risk. If you would invest 1,663 in Gerdau SA on September 2, 2024 and sell it today you would earn a total of 297.00 from holding Gerdau SA or generate 17.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.4% |
| Values | Daily Returns |
Gerdau SA vs. Voestalpine AG
Performance |
| Timeline |
| Gerdau SA |
| Voestalpine AG |
Gerdau SA and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Voestalpine
The main advantage of trading using opposite Gerdau SA and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine'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 |
| Voestalpine vs. Steel Dynamics | Voestalpine vs. Huadi International Group | Voestalpine vs. Nucor Corp | Voestalpine vs. Cleveland Cliffs |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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