Correlation Between Pettenati and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Pettenati 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 Pettenati and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pettenati SA Industria and Gerdau SA, you can compare the effects of market volatilities on Pettenati 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 Pettenati with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pettenati and Gerdau SA.
Diversification Opportunities for Pettenati and Gerdau SA
Good diversification
The 3 months correlation between Pettenati and Gerdau is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pettenati SA Industria and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA and Pettenati 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 Pettenati SA Industria 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 Pettenati i.e., Pettenati and Gerdau SA go up and down completely randomly.
Pair Corralation between Pettenati and Gerdau SA
Assuming the 90 days trading horizon Pettenati SA Industria is expected to under-perform the Gerdau SA. In addition to that, Pettenati is 1.31 times more volatile than Gerdau SA. It trades about -0.17 of its total potential returns per unit of risk. Gerdau SA is currently generating about -0.21 per unit of volatility. If you would invest 2,013 in Gerdau SA on September 28, 2024 and sell it today you would lose (142.00) from holding Gerdau SA or give up 7.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pettenati SA Industria vs. Gerdau SA
Performance |
| Timeline |
| Pettenati SA Industria |
| Gerdau SA |
Pettenati and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pettenati and Gerdau SA
The main advantage of trading using opposite Pettenati and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pettenati 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.| Pettenati vs. Companhia de Gs | Pettenati vs. Springs Global Participaes | Pettenati vs. Companhia de Tecidos | Pettenati vs. Marcopolo SA |
| Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Banco Bradesco SA | Gerdau SA vs. Vale SA | Gerdau SA vs. Petrleo Brasileiro SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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