Correlation Between Ternium SA and United States
Can any of the company-specific risk be diversified away by investing in both Ternium SA and United States 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 Ternium SA and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA and United States Steel, you can compare the effects of market volatilities on Ternium SA and United States 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 Ternium SA with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and United States.
Diversification Opportunities for Ternium SA and United States
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ternium and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Ternium SA 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 Ternium SA are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Ternium SA i.e., Ternium SA and United States go up and down completely randomly.
Pair Corralation between Ternium SA and United States
Assuming the 90 days horizon Ternium SA is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA is 4.94 times less risky than United States. The stock trades about -0.15 of its potential returns per unit of risk. The United States Steel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 68,888 in United States Steel on November 3, 2024 and sell it today you would earn a total of 5,992 from holding United States Steel or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA vs. United States Steel
Performance |
| Timeline |
| Ternium SA |
| United States Steel |
Ternium SA and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and United States
The main advantage of trading using opposite Ternium SA and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Ternium SA vs. Micron Technology | Ternium SA vs. New Oriental Education | Ternium SA vs. United Airlines Holdings | Ternium SA vs. Cognizant Technology Solutions |
| United States vs. United Airlines Holdings | United States vs. Verizon Communications | United States vs. DXC Technology | United States vs. Grupo Sports World |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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