Correlation Between Metalurgica Gerdau and Rumo SA
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Rumo 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 Metalurgica Gerdau and Rumo SA 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 Rumo SA, you can compare the effects of market volatilities on Metalurgica Gerdau and Rumo 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 Metalurgica Gerdau with a short position of Rumo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Rumo SA.
Diversification Opportunities for Metalurgica Gerdau and Rumo SA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metalurgica and Rumo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Rumo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumo 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 Rumo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumo SA has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Rumo SA go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Rumo SA
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 1.27 times more return on investment than Rumo SA. However, Metalurgica Gerdau is 1.27 times more volatile than Rumo SA. It trades about 0.32 of its potential returns per unit of risk. Rumo SA is currently generating about -0.21 per unit of risk. If you would invest 1,004 in Metalurgica Gerdau SA on September 5, 2024 and sell it today you would earn a total of 164.00 from holding Metalurgica Gerdau SA or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Rumo SA
Performance |
| Timeline |
| Metalurgica Gerdau |
| Rumo SA |
Metalurgica Gerdau and Rumo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Rumo SA
The main advantage of trading using opposite Metalurgica Gerdau and Rumo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Rumo 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 Rumo SA will offset losses from the drop in Rumo SA'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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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