Correlation Between Usinas Siderurgicas and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Usinas Siderurgicas and Gerdau 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 Usinas Siderurgicas and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Usinas Siderurgicas de and Gerdau SA ADR, you can compare the effects of market volatilities on Usinas Siderurgicas and Gerdau 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 Usinas Siderurgicas with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usinas Siderurgicas and Gerdau SA.
Diversification Opportunities for Usinas Siderurgicas and Gerdau SA
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Usinas and Gerdau is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Usinas Siderurgicas de and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR and Usinas Siderurgicas 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 Usinas Siderurgicas de are associated (or correlated) with Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Usinas Siderurgicas i.e., Usinas Siderurgicas and Gerdau SA go up and down completely randomly.
Pair Corralation between Usinas Siderurgicas and Gerdau SA
Assuming the 90 days horizon Usinas Siderurgicas de is expected to under-perform the Gerdau SA. In addition to that, Usinas Siderurgicas is 1.33 times more volatile than Gerdau SA ADR. It trades about -0.11 of its total potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.13 per unit of volatility. If you would invest 318.00 in Gerdau SA ADR on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Gerdau SA ADR or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Usinas Siderurgicas de vs. Gerdau SA ADR
Performance |
| Timeline |
| Usinas Siderurgicas |
| Gerdau SA ADR |
Usinas Siderurgicas and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Usinas Siderurgicas and Gerdau SA
The main advantage of trading using opposite Usinas Siderurgicas and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usinas Siderurgicas position performs unexpectedly, Gerdau 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| Usinas Siderurgicas vs. Olympic Steel | Usinas Siderurgicas vs. Mesabi Trust | Usinas Siderurgicas vs. Universal Stainless Alloy | Usinas Siderurgicas vs. Outokumpu Oyj ADR |
| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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