Correlation Between Metalurgica Gerdau and Alupar Investimento
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Alupar Investimento 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 Alupar Investimento 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 Alupar Investimento SA, you can compare the effects of market volatilities on Metalurgica Gerdau and Alupar Investimento 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 Alupar Investimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Alupar Investimento.
Diversification Opportunities for Metalurgica Gerdau and Alupar Investimento
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metalurgica and Alupar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Alupar Investimento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alupar Investimento 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 Alupar Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alupar Investimento has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Alupar Investimento go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Alupar Investimento
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 2.28 times less return on investment than Alupar Investimento. In addition to that, Metalurgica Gerdau is 1.22 times more volatile than Alupar Investimento SA. It trades about 0.02 of its total potential returns per unit of risk. Alupar Investimento SA is currently generating about 0.04 per unit of volatility. If you would invest 668.00 in Alupar Investimento SA on September 5, 2024 and sell it today you would earn a total of 236.00 from holding Alupar Investimento SA or generate 35.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Alupar Investimento SA
Performance |
| Timeline |
| Metalurgica Gerdau |
| Alupar Investimento |
Metalurgica Gerdau and Alupar Investimento Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Alupar Investimento
The main advantage of trading using opposite Metalurgica Gerdau and Alupar Investimento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Alupar Investimento 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 Alupar Investimento will offset losses from the drop in Alupar Investimento'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 |
| Alupar Investimento vs. British American Tobacco | Alupar Investimento vs. UnitedHealth Group Incorporated | Alupar Investimento vs. Marvell Technology | Alupar Investimento vs. Beyond Meat |
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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