Correlation Between Metalurgica Gerdau and Lupatech

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

Diversification Opportunities for Metalurgica Gerdau and Lupatech

-0.34

Correlation Coefficient

Metalurgica Gerdau  Lupatech

Very good diversification

The 3 months correlation between Metalurgica and Lupatech is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA 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 Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Lupatech go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and Lupatech

Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the Lupatech. But the preferred stock apears to be less risky and, when comparing its historical volatility, Metalurgica Gerdau SA is 1.81 times less risky than Lupatech. The preferred stock trades about -0.5 of its potential returns per unit of risk. The Lupatech SA is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Lupatech SA on October 7, 2024 and sell it today you would lose (11.00) from holding Lupatech SA or give up 8.27% of portfolio value over 90 days.

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

Metalurgica Gerdau SA  vs.  Lupatech SA

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.

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Metalurgica Gerdau and Lupatech

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

The idea behind Metalurgica Gerdau SA and Lupatech SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.