Correlation Between Metalurgica Gerdau and Fras Le
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Fras Le 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 Metalurgica Gerdau and Fras Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalurgica Gerdau SA and Fras le SA, you can compare the effects of market volatilities on Metalurgica Gerdau and Fras Le 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 Metalurgica Gerdau with a short position of Fras Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Fras Le.
Diversification Opportunities for Metalurgica Gerdau and Fras Le
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metalurgica and Fras is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA and Metalurgica Gerdau 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 Metalurgica Gerdau SA are associated (or correlated) with Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Fras Le go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Fras Le
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 4.58 times less return on investment than Fras Le. In addition to that, Metalurgica Gerdau is 1.26 times more volatile than Fras le SA. It trades about 0.02 of its total potential returns per unit of risk. Fras le SA is currently generating about 0.1 per unit of volatility. If you would invest 1,013 in Fras le SA on August 27, 2024 and sell it today you would earn a total of 1,052 from holding Fras le SA or generate 103.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Fras le SA
Performance |
| Timeline |
| Metalurgica Gerdau |
| Fras le SA |
Metalurgica Gerdau and Fras Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Fras Le
The main advantage of trading using opposite Metalurgica Gerdau and Fras Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Fras Le 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 Fras Le will offset losses from the drop in Fras Le's long position.| Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Metalurgica Gerdau SA | Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Bradespar 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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