Correlation Between Iochpe Maxion and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Iochpe Maxion and Gerdau SA 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 Iochpe Maxion and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iochpe Maxion SA and Gerdau SA, you can compare the effects of market volatilities on Iochpe Maxion and Gerdau SA 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 Iochpe Maxion with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iochpe Maxion and Gerdau SA.
Diversification Opportunities for Iochpe Maxion and Gerdau SA
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iochpe and Gerdau is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Iochpe Maxion SA and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA and Iochpe Maxion 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 Iochpe Maxion SA are associated (or correlated) with Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA has no effect on the direction of Iochpe Maxion i.e., Iochpe Maxion and Gerdau SA go up and down completely randomly.
Pair Corralation between Iochpe Maxion and Gerdau SA
Assuming the 90 days trading horizon Iochpe Maxion SA is expected to generate 1.29 times more return on investment than Gerdau SA. However, Iochpe Maxion is 1.29 times more volatile than Gerdau SA. It trades about 0.01 of its potential returns per unit of risk. Gerdau SA is currently generating about 0.0 per unit of risk. If you would invest 1,181 in Iochpe Maxion SA on August 24, 2024 and sell it today you would lose (31.00) from holding Iochpe Maxion SA or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Iochpe Maxion SA vs. Gerdau SA
Performance |
| Timeline |
| Iochpe Maxion SA |
| Gerdau SA |
Iochpe Maxion and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iochpe Maxion and Gerdau SA
The main advantage of trading using opposite Iochpe Maxion and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iochpe Maxion position performs unexpectedly, Gerdau SA 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| Iochpe Maxion vs. METISA Metalrgica Timboense | Iochpe Maxion vs. Lupatech SA | Iochpe Maxion vs. Recrusul SA | Iochpe Maxion vs. Fras le SA |
| Gerdau SA vs. Metalurgica Gerdau SA | Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Companhia Energtica de | Gerdau SA vs. Companhia Paranaense 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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