Correlation Between Grupo Simec and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Grupo Simec 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 Grupo Simec and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Simec SAB and Gerdau SA ADR, you can compare the effects of market volatilities on Grupo Simec 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 Grupo Simec with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Gerdau SA.
Diversification Opportunities for Grupo Simec and Gerdau SA
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grupo and Gerdau is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB 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 Grupo Simec 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 Grupo Simec SAB 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 Grupo Simec i.e., Grupo Simec and Gerdau SA go up and down completely randomly.
Pair Corralation between Grupo Simec and Gerdau SA
Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Gerdau SA. In addition to that, Grupo Simec is 1.28 times more volatile than Gerdau SA ADR. It trades about -0.02 of its total potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.05 per unit of volatility. If you would invest 327.00 in Gerdau SA ADR on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Gerdau SA ADR or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Grupo Simec SAB vs. Gerdau SA ADR
Performance |
| Timeline |
| Grupo Simec SAB |
| Gerdau SA ADR |
Grupo Simec and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Simec and Gerdau SA
The main advantage of trading using opposite Grupo Simec and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec 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.| Grupo Simec vs. Fortitude Gold Corp | Grupo Simec vs. New Gold | Grupo Simec vs. Galiano Gold | Grupo Simec vs. GoldMining |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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