Correlation Between Gerdau SA and Randon SA
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Randon SA 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 Gerdau SA and Randon SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and Randon SA Implementos, you can compare the effects of market volatilities on Gerdau SA and Randon SA 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 Gerdau SA with a short position of Randon SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Randon SA.
Diversification Opportunities for Gerdau SA and Randon SA
Very good diversification
The 3 months correlation between Gerdau and Randon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and Randon SA Implementos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randon SA Implementos and Gerdau SA 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 Gerdau SA are associated (or correlated) with Randon SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randon SA Implementos has no effect on the direction of Gerdau SA i.e., Gerdau SA and Randon SA go up and down completely randomly.
Pair Corralation between Gerdau SA and Randon SA
Assuming the 90 days trading horizon Gerdau SA is expected to generate 0.9 times more return on investment than Randon SA. However, Gerdau SA is 1.12 times less risky than Randon SA. It trades about -0.01 of its potential returns per unit of risk. Randon SA Implementos is currently generating about -0.21 per unit of risk. If you would invest 1,836 in Gerdau SA on March 2, 2024 and sell it today you would lose (12.00) from holding Gerdau SA or give up 0.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gerdau SA vs. Randon SA Implementos
Performance |
Timeline |
Gerdau SA |
Randon SA Implementos |
Gerdau SA and Randon SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gerdau SA and Randon SA
The main advantage of trading using opposite Gerdau SA and Randon SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Randon SA 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 Randon SA will offset losses from the drop in Randon SA's long position.Gerdau SA vs. Usinas Siderrgicas de | Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Banco Bradesco SA | Gerdau SA vs. Vale SA |
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Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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