Correlation Between Metalurgica Gerdau and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Companhia Siderrgica 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 Companhia Siderrgica 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 Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Metalurgica Gerdau and Companhia Siderrgica 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 Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Companhia Siderrgica.
Diversification Opportunities for Metalurgica Gerdau and Companhia Siderrgica
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Metalurgica and Companhia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Companhia Siderrgica
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.7 times more return on investment than Companhia Siderrgica. However, Metalurgica Gerdau SA is 1.43 times less risky than Companhia Siderrgica. It trades about 0.03 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.05 per unit of risk. If you would invest 997.00 in Metalurgica Gerdau SA on August 27, 2024 and sell it today you would earn a total of 102.00 from holding Metalurgica Gerdau SA or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Metalurgica Gerdau |
| Companhia Siderrgica |
Metalurgica Gerdau and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Companhia Siderrgica
The main advantage of trading using opposite Metalurgica Gerdau and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de | Metalurgica Gerdau vs. Companhia Paranaense de |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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