Correlation Between Voestalpine and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Voestalpine 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 Voestalpine and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voestalpine AG PK and Gerdau SA ADR, you can compare the effects of market volatilities on Voestalpine 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 Voestalpine with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voestalpine and Gerdau SA.
Diversification Opportunities for Voestalpine and Gerdau SA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Voestalpine and Gerdau is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Voestalpine AG PK 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 Voestalpine 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 Voestalpine AG PK 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 Voestalpine i.e., Voestalpine and Gerdau SA go up and down completely randomly.
Pair Corralation between Voestalpine and Gerdau SA
Assuming the 90 days horizon Voestalpine AG PK is expected to under-perform the Gerdau SA. In addition to that, Voestalpine is 1.35 times more volatile than Gerdau SA ADR. It trades about -0.02 of its total potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.0 per unit of volatility. If you would invest 370.00 in Gerdau SA ADR on September 19, 2024 and sell it today you would lose (39.00) from holding Gerdau SA ADR or give up 10.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voestalpine AG PK vs. Gerdau SA ADR
Performance |
| Timeline |
| Voestalpine AG PK |
| Gerdau SA ADR |
Voestalpine and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voestalpine and Gerdau SA
The main advantage of trading using opposite Voestalpine and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voestalpine 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.| Voestalpine vs. Gerdau SA ADR | Voestalpine vs. Usinas Siderurgicas de | Voestalpine vs. Ternium SA ADR | Voestalpine vs. POSCO Holdings |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |