Correlation Between Outokumpu Oyj and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Outokumpu Oyj 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 Outokumpu Oyj and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outokumpu Oyj ADR and Gerdau SA ADR, you can compare the effects of market volatilities on Outokumpu Oyj 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 Outokumpu Oyj with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outokumpu Oyj and Gerdau SA.
Diversification Opportunities for Outokumpu Oyj and Gerdau SA
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Outokumpu and Gerdau is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Outokumpu Oyj ADR and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR and Outokumpu Oyj 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 Outokumpu Oyj ADR 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 ADR has no effect on the direction of Outokumpu Oyj i.e., Outokumpu Oyj and Gerdau SA go up and down completely randomly.
Pair Corralation between Outokumpu Oyj and Gerdau SA
Assuming the 90 days horizon Outokumpu Oyj ADR is expected to under-perform the Gerdau SA. In addition to that, Outokumpu Oyj is 1.1 times more volatile than Gerdau SA ADR. It trades about -0.06 of its total potential returns per unit of risk. Gerdau SA ADR is currently generating about -0.01 per unit of volatility. If you would invest 403.00 in Gerdau SA ADR on August 31, 2024 and sell it today you would lose (67.00) from holding Gerdau SA ADR or give up 16.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 83.96% |
| Values | Daily Returns |
Outokumpu Oyj ADR vs. Gerdau SA ADR
Performance |
| Timeline |
| Outokumpu Oyj ADR |
| Gerdau SA ADR |
Outokumpu Oyj and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outokumpu Oyj and Gerdau SA
The main advantage of trading using opposite Outokumpu Oyj and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outokumpu Oyj 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.| Outokumpu Oyj vs. Companhia Siderurgica Nacional | Outokumpu Oyj vs. Olympic Steel | Outokumpu Oyj vs. Universal Stainless Alloy | Outokumpu Oyj vs. Usinas Siderurgicas de |
| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |