Correlation Between Unipar Carbocloro and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Unipar Carbocloro and Metalurgica Gerdau 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 Unipar Carbocloro and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unipar Carbocloro SA and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Unipar Carbocloro and Metalurgica Gerdau 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 Unipar Carbocloro with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unipar Carbocloro and Metalurgica Gerdau.
Diversification Opportunities for Unipar Carbocloro and Metalurgica Gerdau
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unipar and Metalurgica is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Unipar Carbocloro SA and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and Unipar Carbocloro 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 Unipar Carbocloro SA are associated (or correlated) with Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Unipar Carbocloro i.e., Unipar Carbocloro and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Unipar Carbocloro and Metalurgica Gerdau
Assuming the 90 days trading horizon Unipar Carbocloro SA is expected to generate 1.51 times more return on investment than Metalurgica Gerdau. However, Unipar Carbocloro is 1.51 times more volatile than Metalurgica Gerdau SA. It trades about 0.21 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.23 per unit of risk. If you would invest 4,281 in Unipar Carbocloro SA on August 30, 2024 and sell it today you would earn a total of 677.00 from holding Unipar Carbocloro SA or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unipar Carbocloro SA vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Unipar Carbocloro |
| Metalurgica Gerdau |
Unipar Carbocloro and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unipar Carbocloro and Metalurgica Gerdau
The main advantage of trading using opposite Unipar Carbocloro and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unipar Carbocloro position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Unipar Carbocloro vs. Transmissora Aliana de | Unipar Carbocloro vs. CTEEP Companhia | Unipar Carbocloro vs. Braskem SA | Unipar Carbocloro vs. Cia de Ferro |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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