Correlation Between Metalurgica Gerdau and Unipar Carbocloro
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Unipar Carbocloro 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 Unipar Carbocloro 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 Unipar Carbocloro SA, you can compare the effects of market volatilities on Metalurgica Gerdau and Unipar Carbocloro 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 Unipar Carbocloro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Unipar Carbocloro.
Diversification Opportunities for Metalurgica Gerdau and Unipar Carbocloro
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metalurgica and Unipar is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Unipar Carbocloro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipar Carbocloro 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 Unipar Carbocloro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipar Carbocloro has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Unipar Carbocloro go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Unipar Carbocloro
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.84 times more return on investment than Unipar Carbocloro. However, Metalurgica Gerdau SA is 1.19 times less risky than Unipar Carbocloro. It trades about 0.05 of its potential returns per unit of risk. Unipar Carbocloro SA is currently generating about 0.04 per unit of risk. If you would invest 1,024 in Metalurgica Gerdau SA on August 30, 2024 and sell it today you would earn a total of 107.00 from holding Metalurgica Gerdau SA or generate 10.45% 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. Unipar Carbocloro SA
Performance |
| Timeline |
| Metalurgica Gerdau |
| Unipar Carbocloro |
Metalurgica Gerdau and Unipar Carbocloro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Unipar Carbocloro
The main advantage of trading using opposite Metalurgica Gerdau and Unipar Carbocloro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Unipar Carbocloro 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 Unipar Carbocloro will offset losses from the drop in Unipar Carbocloro'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 |
| Unipar Carbocloro vs. Transmissora Aliana de | Unipar Carbocloro vs. CTEEP Companhia | Unipar Carbocloro vs. Braskem SA | Unipar Carbocloro vs. Cia de Ferro |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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