Correlation Between Ternium SA and AdvanSix
Can any of the company-specific risk be diversified away by investing in both Ternium SA and AdvanSix 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 AdvanSix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and AdvanSix, you can compare the effects of market volatilities on Ternium SA and AdvanSix 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 AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and AdvanSix.
Diversification Opportunities for Ternium SA and AdvanSix
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ternium and AdvanSix is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 ADR are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Ternium SA i.e., Ternium SA and AdvanSix go up and down completely randomly.
Pair Corralation between Ternium SA and AdvanSix
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to under-perform the AdvanSix. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA ADR is 1.13 times less risky than AdvanSix. The stock trades about -0.01 of its potential returns per unit of risk. The AdvanSix is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,900 in AdvanSix on August 24, 2024 and sell it today you would earn a total of 210.00 from holding AdvanSix or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA ADR vs. AdvanSix
Performance |
| Timeline |
| Ternium SA ADR |
| AdvanSix |
Ternium SA and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and AdvanSix
The main advantage of trading using opposite Ternium SA and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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