Correlation Between Valid Solues and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Valid Solues and Metalurgica Gerdau 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 Valid Solues and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valid Solues SA and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Valid Solues and Metalurgica Gerdau 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 Valid Solues with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valid Solues and Metalurgica Gerdau.
Diversification Opportunities for Valid Solues and Metalurgica Gerdau
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valid and Metalurgica is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Valid Solues SA and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and Valid Solues 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 Valid Solues SA are associated (or correlated) with Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Valid Solues i.e., Valid Solues and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Valid Solues and Metalurgica Gerdau
Assuming the 90 days trading horizon Valid Solues is expected to generate 1.67 times less return on investment than Metalurgica Gerdau. But when comparing it to its historical volatility, Valid Solues SA is 1.05 times less risky than Metalurgica Gerdau. It trades about 0.1 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 966.00 in Metalurgica Gerdau SA on September 8, 2025 and sell it today you would earn a total of 146.00 from holding Metalurgica Gerdau SA or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valid Solues SA vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Valid Solues SA |
| Metalurgica Gerdau |
Valid Solues and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valid Solues and Metalurgica Gerdau
The main advantage of trading using opposite Valid Solues and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valid Solues position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Valid Solues vs. Eucatex SA Indstria | Valid Solues vs. Eucatex SA Indstria | Valid Solues vs. OceanPact Servios Martimos | Valid Solues vs. Kepler Weber 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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