Correlation Between Ternium SA and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Voestalpine 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 Voestalpine 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 Voestalpine AG PK, you can compare the effects of market volatilities on Ternium SA and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Voestalpine.
Diversification Opportunities for Ternium SA and Voestalpine
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ternium and Voestalpine is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Voestalpine AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG PK 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG PK has no effect on the direction of Ternium SA i.e., Ternium SA and Voestalpine go up and down completely randomly.
Pair Corralation between Ternium SA and Voestalpine
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to generate 0.69 times more return on investment than Voestalpine. However, Ternium SA ADR is 1.44 times less risky than Voestalpine. It trades about -0.12 of its potential returns per unit of risk. Voestalpine AG PK is currently generating about -0.11 per unit of risk. If you would invest 3,410 in Ternium SA ADR on September 20, 2024 and sell it today you would lose (481.00) from holding Ternium SA ADR or give up 14.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA ADR vs. Voestalpine AG PK
Performance |
| Timeline |
| Ternium SA ADR |
| Voestalpine AG PK |
Ternium SA and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Voestalpine
The main advantage of trading using opposite Ternium SA and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Voestalpine vs. ArcelorMittal SA ADR | Voestalpine vs. Gerdau SA ADR | Voestalpine vs. POSCO Holdings | Voestalpine vs. HUMANA INC |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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