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 DRC 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
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ternium and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA DRC 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 DRC 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 trading horizon Ternium SA DRC is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA DRC is 1.91 times less risky than United States. The stock trades about -0.25 of its potential returns per unit of risk. The United States Steel is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,565,000 in United States Steel on August 24, 2024 and sell it today you would lose (40,000) from holding United States Steel or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA DRC vs. United States Steel
Performance |
| Timeline |
| Ternium SA DRC |
| 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. United States Steel | Ternium SA vs. Pfizer Inc | Ternium SA vs. Garovaglio y Zorraquin | Ternium SA vs. Telecom Argentina |
| United States vs. Pfizer Inc | United States vs. Garovaglio y Zorraquin | United States vs. Telecom Argentina | United States vs. Harmony Gold Mining |
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 CEOs Directory module to screen CEOs from public companies around the world.
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