Correlation Between Universal Stainless and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Universal Stainless and Ternium SA 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 Universal Stainless and Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Stainless Alloy and Ternium SA ADR, you can compare the effects of market volatilities on Universal Stainless and Ternium SA 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 Universal Stainless with a short position of Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and Ternium SA.
Diversification Opportunities for Universal Stainless and Ternium SA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and Ternium is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and Ternium SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA ADR and Universal Stainless 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 Universal Stainless Alloy are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA ADR has no effect on the direction of Universal Stainless i.e., Universal Stainless and Ternium SA go up and down completely randomly.
Pair Corralation between Universal Stainless and Ternium SA
Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.19 times more return on investment than Ternium SA. However, Universal Stainless Alloy is 5.19 times less risky than Ternium SA. It trades about 0.19 of its potential returns per unit of risk. Ternium SA ADR is currently generating about -0.05 per unit of risk. If you would invest 4,364 in Universal Stainless Alloy on August 27, 2024 and sell it today you would earn a total of 70.00 from holding Universal Stainless Alloy or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Stainless Alloy vs. Ternium SA ADR
Performance |
| Timeline |
| Universal Stainless Alloy |
| Ternium SA ADR |
Universal Stainless and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Stainless and Ternium SA
The main advantage of trading using opposite Universal Stainless and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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