Correlation Between Metalurgica Gerdau and Universal Health

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

Diversification Opportunities for Metalurgica Gerdau and Universal Health

-0.65

Correlation Coefficient

Metalurgica Gerdau  Universal Health

Excellent diversification

The 3 months correlation between Metalurgica and Universal is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Universal Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Ser 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Ser has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Universal Health go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and Universal Health

Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the Universal Health. In addition to that, Metalurgica Gerdau is 6.16 times more volatile than Universal Health Services,. It trades about -0.19 of its total potential returns per unit of risk. Universal Health Services, is currently generating about 0.2 per unit of volatility. If you would invest  28,735  in Universal Health Services, on October 7, 2024 and sell it today you would earn a total of  658.00  from holding Universal Health Services, or generate 2.29% return on investment over 90 days.

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

Metalurgica Gerdau SA  vs.  Universal Health Services,

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.

Universal Health Ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Universal Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metalurgica Gerdau and Universal Health

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

The idea behind Metalurgica Gerdau SA and Universal Health Services, 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.