Correlation Between Gerdau SA and Kinetics Internet

Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Kinetics Internet 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 Kinetics Internet 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 Kinetics Internet Fund, you can compare the effects of market volatilities on Gerdau SA and Kinetics Internet 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 Kinetics Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Kinetics Internet.

Diversification Opportunities for Gerdau SA and Kinetics Internet

0.2

Correlation Coefficient

Gerdau SA  Kinetics Internet

Modest diversification

The 3 months correlation between Gerdau and Kinetics is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Kinetics Internet Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Internet 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 Kinetics Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Internet has no effect on the direction of Gerdau SA i.e., Gerdau SA and Kinetics Internet go up and down completely randomly.

Pair Corralation between Gerdau SA and Kinetics Internet

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 1.89 times more return on investment than Kinetics Internet. However, Gerdau SA is 1.89 times more volatile than Kinetics Internet Fund. It trades about 0.09 of its potential returns per unit of risk. Kinetics Internet Fund is currently generating about 0.05 per unit of risk. If you would invest  256.00  in Gerdau SA ADR on May 6, 2025 and sell it today you would earn a total of  30.00  from holding Gerdau SA ADR or generate 11.72% return on investment over 90 days.

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

Gerdau SA ADR  vs.  Kinetics Internet Fund

Gerdau SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gerdau SA ADR are ranked lower than 6 (%) 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.

Kinetics Internet

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Internet Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kinetics Internet is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gerdau SA and Kinetics Internet

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

The idea behind Gerdau SA ADR and Kinetics Internet Fund 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.