Correlation Between Gerdau SA and Optimum Fixed

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

Diversification Opportunities for Gerdau SA and Optimum Fixed

0.55

Correlation Coefficient

Gerdau SA  Optimum Fixed

Very weak diversification

The 3 months correlation between Gerdau and Optimum is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Optimum Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Fixed Income 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 Optimum Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Fixed Income has no effect on the direction of Gerdau SA i.e., Gerdau SA and Optimum Fixed go up and down completely randomly.

Pair Corralation between Gerdau SA and Optimum Fixed

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 7.78 times more return on investment than Optimum Fixed. However, Gerdau SA is 7.78 times more volatile than Optimum Fixed Income. It trades about 0.08 of its potential returns per unit of risk. Optimum Fixed Income is currently generating about 0.13 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	Weak
Accuracy	98.41%
Values	Daily Returns

Gerdau SA ADR  vs.  Optimum Fixed Income

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.

Optimum Fixed Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Fixed Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Optimum Fixed 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 Optimum Fixed

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

The idea behind Gerdau SA ADR and Optimum Fixed Income 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.