Correlation Between Metalurgica Gerdau and BIONTECH

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

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

Diversification Opportunities for Metalurgica Gerdau and BIONTECH

0.63

Correlation Coefficient

Metalurgica Gerdau  BIONTECH

Poor diversification

The 3 months correlation between Metalurgica and BIONTECH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and BIONTECH SE DRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIONTECH SE DRN and Metalurgica Gerdau 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 Metalurgica Gerdau SA are associated (or correlated) with BIONTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIONTECH SE DRN has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and BIONTECH go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and BIONTECH

Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 7.23 times less return on investment than BIONTECH. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 1.87 times less risky than BIONTECH. It trades about 0.02 of its potential returns per unit of risk. BIONTECH SE DRN is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,105  in BIONTECH SE DRN on September 24, 2024 and sell it today you would earn a total of  1,245  from holding BIONTECH SE DRN or generate 40.1% return on investment over 90 days.

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

Metalurgica Gerdau SA  vs.  BIONTECH SE DRN

Metalurgica Gerdau

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metalurgica Gerdau SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Metalurgica Gerdau is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BIONTECH SE DRN

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Metalurgica Gerdau and BIONTECH

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

The idea behind Metalurgica Gerdau SA and BIONTECH SE DRN 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.