Correlation Between Metalurgica Gerdau and Multilaser Industrial
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Multilaser Industrial 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 Multilaser Industrial 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 Multilaser Industrial SA, you can compare the effects of market volatilities on Metalurgica Gerdau and Multilaser Industrial 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 Multilaser Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Multilaser Industrial.
Diversification Opportunities for Metalurgica Gerdau and Multilaser Industrial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metalurgica and Multilaser is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial 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 Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Multilaser Industrial go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Multilaser Industrial
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 14.07 times less return on investment than Multilaser Industrial. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 1.55 times less risky than Multilaser Industrial. It trades about 0.02 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 114.00 in Multilaser Industrial SA on November 18, 2024 and sell it today you would earn a total of 13.00 from holding Multilaser Industrial SA or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Multilaser Industrial SA
Performance |
| Timeline |
| Metalurgica Gerdau |
| Multilaser Industrial |
Metalurgica Gerdau and Multilaser Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Multilaser Industrial
The main advantage of trading using opposite Metalurgica Gerdau and Multilaser Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Multilaser Industrial 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 Multilaser Industrial will offset losses from the drop in Multilaser Industrial'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 |
| Multilaser Industrial vs. Intelbras SA | Multilaser Industrial vs. Razen SA | Multilaser Industrial vs. Pet Center Comrcio | Multilaser Industrial vs. Locaweb Servios de |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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