Correlation Between Metalurgica Gerdau and JD
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and JD 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 JD 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 JD Inc, you can compare the effects of market volatilities on Metalurgica Gerdau and JD 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 JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and JD.
Diversification Opportunities for Metalurgica Gerdau and JD
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metalurgica and JD is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc 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 JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and JD go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and JD
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.7 times more return on investment than JD. However, Metalurgica Gerdau SA is 1.43 times less risky than JD. It trades about 0.2 of its potential returns per unit of risk. JD Inc is currently generating about -0.17 per unit of risk. If you would invest 1,008 in Metalurgica Gerdau SA on August 29, 2024 and sell it today you would earn a total of 106.00 from holding Metalurgica Gerdau SA or generate 10.52% 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. JD Inc
Performance |
| Timeline |
| Metalurgica Gerdau |
| JD Inc |
Metalurgica Gerdau and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and JD
The main advantage of trading using opposite Metalurgica Gerdau and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, JD 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 JD will offset losses from the drop in JD'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 |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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