Correlation Between Ternium SA and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Commercial Metals 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 Ternium SA and Commercial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and Commercial Metals, you can compare the effects of market volatilities on Ternium SA and Commercial Metals 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 Ternium SA with a short position of Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Commercial Metals.
Diversification Opportunities for Ternium SA and Commercial Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ternium and Commercial is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals and Ternium 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 Ternium SA ADR are associated (or correlated) with Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Ternium SA i.e., Ternium SA and Commercial Metals go up and down completely randomly.
Pair Corralation between Ternium SA and Commercial Metals
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to under-perform the Commercial Metals. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA ADR is 1.23 times less risky than Commercial Metals. The stock trades about 0.0 of its potential returns per unit of risk. The Commercial Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,305 in Commercial Metals on March 9, 2025 and sell it today you would earn a total of 688.00 from holding Commercial Metals or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA ADR vs. Commercial Metals
Performance |
| Timeline |
| Ternium SA ADR |
| Commercial Metals |
Ternium SA and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Commercial Metals
The main advantage of trading using opposite Ternium SA and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. POSCO Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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