Correlation Between Metalurgica Gerdau and G2D Investments
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and G2D Investments 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 G2D Investments 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 G2D Investments, you can compare the effects of market volatilities on Metalurgica Gerdau and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and G2D Investments.
Diversification Opportunities for Metalurgica Gerdau and G2D Investments
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metalurgica and G2D is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and G2D Investments go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and G2D Investments
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.77 times more return on investment than G2D Investments. However, Metalurgica Gerdau SA is 1.3 times less risky than G2D Investments. It trades about 0.11 of its potential returns per unit of risk. G2D Investments is currently generating about -0.12 per unit of risk. If you would invest 1,052 in Metalurgica Gerdau SA on September 12, 2024 and sell it today you would earn a total of 128.00 from holding Metalurgica Gerdau SA or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. G2D Investments
Performance |
| Timeline |
| Metalurgica Gerdau |
| G2D Investments |
Metalurgica Gerdau and G2D Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and G2D Investments
The main advantage of trading using opposite Metalurgica Gerdau and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.| Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
| G2D Investments vs. Tres Tentos Agroindustrial | G2D Investments vs. Nordon Indstrias Metalrgicas | G2D Investments vs. Multilaser Industrial SA | G2D Investments vs. Palantir Technologies |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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