Correlation Between Metalurgica Gerdau and Autohome
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Autohome 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 Autohome 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 Autohome, you can compare the effects of market volatilities on Metalurgica Gerdau and Autohome 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 Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Autohome.
Diversification Opportunities for Metalurgica Gerdau and Autohome
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metalurgica and Autohome is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome 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 Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Autohome go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Autohome
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 1.74 times more return on investment than Autohome. However, Metalurgica Gerdau is 1.74 times more volatile than Autohome. It trades about 0.21 of its potential returns per unit of risk. Autohome is currently generating about -0.2 per unit of risk. If you would invest 1,012 in Metalurgica Gerdau SA on August 30, 2024 and sell it today you would earn a total of 110.00 from holding Metalurgica Gerdau SA or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Autohome
Performance |
| Timeline |
| Metalurgica Gerdau |
| Autohome |
Metalurgica Gerdau and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Autohome
The main advantage of trading using opposite Metalurgica Gerdau and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Autohome 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 Autohome will offset losses from the drop in Autohome's long position.| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
| Autohome vs. SVB Financial Group | Autohome vs. Capital One Financial | Autohome vs. HDFC Bank Limited | Autohome vs. Credit Acceptance |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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