Correlation Between Metalurgica Gerdau and Teladoc Health

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

Diversification Opportunities for Metalurgica Gerdau and Teladoc Health

0.51

Correlation Coefficient

Metalurgica Gerdau  Teladoc Health

Very weak diversification

The 3 months correlation between Metalurgica and Teladoc is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Teladoc Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc 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 Teladoc Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teladoc Health has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Teladoc Health go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and Teladoc Health

Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 4.55 times less return on investment than Teladoc Health. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 2.55 times less risky than Teladoc Health. It trades about 0.12 of its potential returns per unit of risk. Teladoc Health is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Teladoc Health on September 3, 2024 and sell it today you would earn a total of  105.00  from holding Teladoc Health or generate 77.78% return on investment over 90 days.

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

Metalurgica Gerdau SA  vs.  Teladoc Health

Metalurgica Gerdau

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalurgica Gerdau SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metalurgica Gerdau unveiled solid returns over the last few months and may actually be approaching a breakup point.

Teladoc Health

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc Health are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Teladoc Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalurgica Gerdau and Teladoc Health

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

The idea behind Metalurgica Gerdau SA and Teladoc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.