Correlation Between Gerdau SA and JBS SA
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and JBS 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 JBS 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 JBS SA, you can compare the effects of market volatilities on Gerdau SA and JBS 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and JBS SA.
Diversification Opportunities for Gerdau SA and JBS SA
Modest diversification
The 3 months correlation between Gerdau and JBS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Gerdau SA i.e., Gerdau SA and JBS SA go up and down completely randomly.
Pair Corralation between Gerdau SA and JBS SA
Assuming the 90 days trading horizon Gerdau SA is expected to generate 1.18 times more return on investment than JBS SA. However, Gerdau SA is 1.18 times more volatile than JBS SA. It trades about 0.23 of its potential returns per unit of risk. JBS SA is currently generating about -0.02 per unit of risk. If you would invest 1,814 in Gerdau SA on August 31, 2024 and sell it today you would earn a total of 211.00 from holding Gerdau SA or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerdau SA vs. JBS SA
Performance |
| Timeline |
| Gerdau SA |
| JBS SA |
Gerdau SA and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and JBS SA
The main advantage of trading using opposite Gerdau SA and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, JBS 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 JBS SA will offset losses from the drop in JBS SA's long position.| Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Usinas Siderrgicas de | Gerdau SA vs. Companhia Energtica de | Gerdau SA vs. Cosan SA |
| JBS SA vs. Companhia Siderrgica Nacional | JBS SA vs. Cyrela Brazil Realty | JBS SA vs. Fras le SA | JBS SA vs. Energisa SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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