Correlation Between Gerdau SA and ARB IOT

Can any of the company-specific risk be diversified away by investing in both Gerdau SA and ARB IOT 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 ARB IOT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gerdau SA ADR and ARB IOT Group, you can compare the effects of market volatilities on Gerdau SA and ARB IOT 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 ARB IOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and ARB IOT.

Diversification Opportunities for Gerdau SA and ARB IOT

-0.54

Correlation Coefficient

Gerdau SA  ARB IOT

Excellent diversification

The 3 months correlation between Gerdau and ARB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and ARB IOT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB IOT Group 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 ADR are associated (or correlated) with ARB IOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB IOT Group has no effect on the direction of Gerdau SA i.e., Gerdau SA and ARB IOT go up and down completely randomly.

Pair Corralation between Gerdau SA and ARB IOT

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 0.52 times more return on investment than ARB IOT. However, Gerdau SA ADR is 1.91 times less risky than ARB IOT. It trades about 0.11 of its potential returns per unit of risk. ARB IOT Group is currently generating about -0.2 per unit of risk. If you would invest  251.00  in Gerdau SA ADR on May 7, 2025 and sell it today you would earn a total of  41.00  from holding Gerdau SA ADR or generate 16.33% return on investment over 90 days.

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

Gerdau SA ADR  vs.  ARB IOT Group

Gerdau SA ADR

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Gerdau SA ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Gerdau SA sustained solid returns over the last few months and may actually be approaching a breakup point.

ARB IOT Group

Risk-Adjusted Performance

Weakest

Over the last 90 days ARB IOT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gerdau SA and ARB IOT

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

The idea behind Gerdau SA ADR and ARB IOT Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.