Correlation Between Ternium SA and Garovaglio

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Can any of the company-specific risk be diversified away by investing in both Ternium SA and Garovaglio 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 Garovaglio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA DRC and Garovaglio y Zorraquin, you can compare the effects of market volatilities on Ternium SA and Garovaglio 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 Garovaglio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Garovaglio.

Diversification Opportunities for Ternium SA and Garovaglio

TerniumGarovaglioDiversified AwayTerniumGarovaglioDiversified Away100%
0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ternium and Garovaglio is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA DRC and Garovaglio y Zorraquin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garovaglio y Zorraquin 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 DRC are associated (or correlated) with Garovaglio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garovaglio y Zorraquin has no effect on the direction of Ternium SA i.e., Ternium SA and Garovaglio go up and down completely randomly.

Pair Corralation between Ternium SA and Garovaglio

Assuming the 90 days trading horizon Ternium SA is expected to generate 5.24 times less return on investment than Garovaglio. But when comparing it to its historical volatility, Ternium SA DRC is 1.18 times less risky than Garovaglio. It trades about 0.02 of its potential returns per unit of risk. Garovaglio y Zorraquin is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,135  in Garovaglio y Zorraquin on November 29, 2024 and sell it today you would earn a total of  17,890  from holding Garovaglio y Zorraquin or generate 432.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ternium SA DRC  vs.  Garovaglio y Zorraquin

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100150
JavaScript chart by amCharts 3.21.15TXR GARO
       Timeline  
Ternium SA DRC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ternium SA DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ternium SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFeb8,4008,6008,8009,0009,2009,4009,600
Garovaglio y Zorraquin 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Garovaglio y Zorraquin are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Garovaglio sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFeb200250300350

Ternium SA and Garovaglio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.83-2.12-1.41-0.7-0.01170.691.392.092.79 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15TXR GARO
       Returns  

Pair Trading with Ternium SA and Garovaglio

The main advantage of trading using opposite Ternium SA and Garovaglio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Garovaglio 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 Garovaglio will offset losses from the drop in Garovaglio's long position.
The idea behind Ternium SA DRC and Garovaglio y Zorraquin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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