Correlation Between Gerdau SA and 46188BAC6

Can any of the company-specific risk be diversified away by investing in both Gerdau SA and 46188BAC6 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 Gerdau SA and 46188BAC6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gerdau SA ADR and INVH 27 15 JAN 34, you can compare the effects of market volatilities on Gerdau SA and 46188BAC6 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 Gerdau SA with a short position of 46188BAC6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and 46188BAC6.

Diversification Opportunities for Gerdau SA and 46188BAC6

0.31

Correlation Coefficient

Gerdau SA  46188BAC6

Weak diversification

The 3 months correlation between Gerdau and 46188BAC6 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and INVH 27 15 JAN 34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVH 27 15 and Gerdau SA 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 Gerdau SA ADR are associated (or correlated) with 46188BAC6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVH 27 15 has no effect on the direction of Gerdau SA i.e., Gerdau SA and 46188BAC6 go up and down completely randomly.

Pair Corralation between Gerdau SA and 46188BAC6

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 1.54 times more return on investment than 46188BAC6. However, Gerdau SA is 1.54 times more volatile than INVH 27 15 JAN 34. It trades about 0.0 of its potential returns per unit of risk. INVH 27 15 JAN 34 is currently generating about -0.04 per unit of risk. If you would invest  298.00  in Gerdau SA ADR on October 26, 2024 and sell it today you would lose (1.00) from holding Gerdau SA ADR or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	21.05%
Values	Daily Returns

Gerdau SA ADR  vs.  INVH 27 15 JAN 34

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 somewhat strong technical and fundamental indicators, Gerdau SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

INVH 27 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INVH 27 15 JAN 34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INVH 27 15 JAN 34 investors.

Pair Trading with Gerdau SA and 46188BAC6

The main advantage of trading using opposite Gerdau SA and 46188BAC6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, 46188BAC6 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 46188BAC6 will offset losses from the drop in 46188BAC6's long position.

The idea behind Gerdau SA ADR and INVH 27 15 JAN 34 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..