Correlation Between Metalurgica Gerdau and Cardinal Health,

Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Cardinal Health, 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 Cardinal Health, 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 Cardinal Health,, you can compare the effects of market volatilities on Metalurgica Gerdau and Cardinal Health, 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 Cardinal Health,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Cardinal Health,.

Diversification Opportunities for Metalurgica Gerdau and Cardinal Health,

-0.04

Correlation Coefficient

Metalurgica Gerdau  Cardinal Health,

Good diversification

The 3 months correlation between Metalurgica and Cardinal is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Cardinal Health, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health, 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 Cardinal Health,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health, has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Cardinal Health, go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and Cardinal Health,

Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the Cardinal Health,. But the preferred stock apears to be less risky and, when comparing its historical volatility, Metalurgica Gerdau SA is 1.52 times less risky than Cardinal Health,. The preferred stock trades about -0.54 of its potential returns per unit of risk. The Cardinal Health, is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  63,682  in Cardinal Health, on October 6, 2024 and sell it today you would earn a total of  7,818  from holding Cardinal Health, or generate 12.28% return on investment over 90 days.

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

Metalurgica Gerdau SA  vs.  Cardinal Health,

Metalurgica Gerdau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalurgica Gerdau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cardinal Health,

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health, are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cardinal Health, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalurgica Gerdau and Cardinal Health,

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

The idea behind Metalurgica Gerdau SA and Cardinal Health, 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.