Correlation Between Gerdau SA and Guararapes Confeces
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Guararapes Confeces 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 Guararapes Confeces into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and Guararapes Confeces SA, you can compare the effects of market volatilities on Gerdau SA and Guararapes Confeces 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 Guararapes Confeces. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Guararapes Confeces.
Diversification Opportunities for Gerdau SA and Guararapes Confeces
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gerdau and Guararapes is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and Guararapes Confeces SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guararapes Confeces 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 Guararapes Confeces. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guararapes Confeces has no effect on the direction of Gerdau SA i.e., Gerdau SA and Guararapes Confeces go up and down completely randomly.
Pair Corralation between Gerdau SA and Guararapes Confeces
Assuming the 90 days trading horizon Gerdau SA is expected to generate 0.3 times more return on investment than Guararapes Confeces. However, Gerdau SA is 3.28 times less risky than Guararapes Confeces. It trades about -0.21 of its potential returns per unit of risk. Guararapes Confeces SA is currently generating about -0.19 per unit of risk. If you would invest 2,013 in Gerdau SA on September 28, 2024 and sell it today you would lose (142.00) from holding Gerdau SA or give up 7.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerdau SA vs. Guararapes Confeces SA
Performance |
| Timeline |
| Gerdau SA |
| Guararapes Confeces |
Gerdau SA and Guararapes Confeces Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Guararapes Confeces
The main advantage of trading using opposite Gerdau SA and Guararapes Confeces positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Guararapes Confeces 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 Guararapes Confeces will offset losses from the drop in Guararapes Confeces' long position.| Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Banco Bradesco SA | Gerdau SA vs. Vale SA | Gerdau SA vs. Petrleo Brasileiro SA |
| Guararapes Confeces vs. Engie Brasil Energia | Guararapes Confeces vs. Grendene SA | Guararapes Confeces vs. M Dias Branco | Guararapes Confeces vs. BTG Pactual Logstica |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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