Correlation Between Metalurgica Gerdau and Tres Tentos
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Tres Tentos 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 Tres Tentos 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 Tres Tentos Agroindustrial, you can compare the effects of market volatilities on Metalurgica Gerdau and Tres Tentos 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 Tres Tentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Tres Tentos.
Diversification Opportunities for Metalurgica Gerdau and Tres Tentos
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metalurgica and Tres is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Tres Tentos Agroindustrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tres Tentos Agroindu 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 Tres Tentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tres Tentos Agroindu has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Tres Tentos go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Tres Tentos
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 7.39 times less return on investment than Tres Tentos. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 1.23 times less risky than Tres Tentos. It trades about 0.01 of its potential returns per unit of risk. Tres Tentos Agroindustrial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,032 in Tres Tentos Agroindustrial on August 27, 2024 and sell it today you would earn a total of 403.00 from holding Tres Tentos Agroindustrial or generate 39.05% 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. Tres Tentos Agroindustrial
Performance |
| Timeline |
| Metalurgica Gerdau |
| Tres Tentos Agroindu |
Metalurgica Gerdau and Tres Tentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Tres Tentos
The main advantage of trading using opposite Metalurgica Gerdau and Tres Tentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Tres Tentos 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 Tres Tentos will offset losses from the drop in Tres Tentos' long position.| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de | Metalurgica Gerdau vs. Companhia Paranaense de |
| Tres Tentos vs. Vamos Locao de | Tres Tentos vs. Fras le SA | Tres Tentos vs. Clave Indices De | Tres Tentos vs. BTG Pactual Logstica |
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 CEOs Directory module to screen CEOs from public companies around the world.
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