Correlation Between SSAB AB and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both SSAB AB 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 SSAB AB and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB and Gerdau SA ADR, you can compare the effects of market volatilities on SSAB AB 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 SSAB AB with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Gerdau SA.
Diversification Opportunities for SSAB AB and Gerdau SA
Poor diversification
The 3 months correlation between SSAB and Gerdau is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB 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 SSAB AB 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 SSAB AB 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 SSAB AB i.e., SSAB AB and Gerdau SA go up and down completely randomly.
Pair Corralation between SSAB AB and Gerdau SA
Assuming the 90 days horizon SSAB AB is expected to generate 0.96 times more return on investment than Gerdau SA. However, SSAB AB is 1.04 times less risky than Gerdau SA. It trades about 0.13 of its potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.11 per unit of risk. If you would invest 470.00 in SSAB AB on August 30, 2024 and sell it today you would earn a total of 37.00 from holding SSAB AB or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SSAB AB vs. Gerdau SA ADR
Performance |
| Timeline |
| SSAB AB |
| Gerdau SA ADR |
SSAB AB and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Gerdau SA
The main advantage of trading using opposite SSAB AB and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB 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.| SSAB AB vs. Apple Inc | SSAB AB vs. Microsoft | SSAB AB vs. Alphabet Inc Class C | SSAB AB vs. Meta Platforms |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |