Correlation Between Femasys and Gerdau SA

Can any of the company-specific risk be diversified away by investing in both Femasys 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 Femasys and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Femasys and Gerdau SA ADR, you can compare the effects of market volatilities on Femasys 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 Femasys with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Femasys and Gerdau SA.

Diversification Opportunities for Femasys and Gerdau SA

-0.29

Correlation Coefficient

Femasys  Gerdau SA

Very good diversification

The 3 months correlation between Femasys and Gerdau is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Femasys 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 Femasys 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 Femasys 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 Femasys i.e., Femasys and Gerdau SA go up and down completely randomly.

Pair Corralation between Femasys and Gerdau SA

Given the investment horizon of 90 days Femasys is expected to generate 0.99 times more return on investment than Gerdau SA. However, Femasys is 1.01 times less risky than Gerdau SA. It trades about -0.27 of its potential returns per unit of risk. Gerdau SA ADR is currently generating about -0.44 per unit of risk. If you would invest  124.00  in Femasys on October 12, 2024 and sell it today you would lose (15.00) from holding Femasys or give up 12.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Femasys  vs.  Gerdau SA ADR

Femasys

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Femasys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Femasys is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gerdau SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gerdau SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Femasys and Gerdau SA

The main advantage of trading using opposite Femasys and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Femasys 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.

The idea behind Femasys and Gerdau SA ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.