Correlation Between Gerdau SA and Companhia Paranaense

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Companhia Paranaense 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 Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and Companhia Paranaense de, you can compare the effects of market volatilities on Gerdau SA and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Companhia Paranaense.

Diversification Opportunities for Gerdau SA and Companhia Paranaense

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gerdau and Companhia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Gerdau SA i.e., Gerdau SA and Companhia Paranaense go up and down completely randomly.

Pair Corralation between Gerdau SA and Companhia Paranaense

Assuming the 90 days trading horizon Gerdau SA is expected to generate 1.14 times more return on investment than Companhia Paranaense. However, Gerdau SA is 1.14 times more volatile than Companhia Paranaense de. It trades about 0.14 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.08 per unit of risk. If you would invest  1,790  in Gerdau SA on September 6, 2024 and sell it today you would earn a total of  292.00  from holding Gerdau SA or generate 16.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

Gerdau SA  vs.  Companhia Paranaense de

 Performance 
       Timeline  
Gerdau SA 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Gerdau SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gerdau SA unveiled solid returns over the last few months and may actually be approaching a breakup point.
Companhia Paranaense 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Companhia Paranaense de 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.

Gerdau SA and Companhia Paranaense Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gerdau SA and Companhia Paranaense

The main advantage of trading using opposite Gerdau SA and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.
The idea behind Gerdau SA and Companhia Paranaense de 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
CEOs Directory
Screen CEOs from public companies around the world