Correlation Between Metalurgica Gerdau and CRISPR Therapeutics

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

Diversification Opportunities for Metalurgica Gerdau and CRISPR Therapeutics

0.75

Correlation Coefficient

Metalurgica Gerdau  CRISPR Therapeutics

Poor diversification

The 3 months correlation between Metalurgica and CRISPR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics 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 CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and CRISPR Therapeutics

Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 10.46 times less return on investment than CRISPR Therapeutics. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 1.91 times less risky than CRISPR Therapeutics. It trades about 0.0 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,433  in CRISPR Therapeutics AG on October 22, 2024 and sell it today you would lose (367.00) from holding CRISPR Therapeutics AG or give up 10.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.46%
Values	Daily Returns

Metalurgica Gerdau SA  vs.  CRISPR Therapeutics AG

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 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.

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Metalurgica Gerdau and CRISPR Therapeutics

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

The idea behind Metalurgica Gerdau SA and CRISPR Therapeutics AG 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.