Correlation Between Gerdau SA and Rbc Microcap

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

Diversification Opportunities for Gerdau SA and Rbc Microcap

0.79

Correlation Coefficient

Gerdau SA  Rbc Microcap

Poor diversification

The 3 months correlation between Gerdau and Rbc is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Rbc Microcap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Microcap Value 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 Rbc Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Microcap Value has no effect on the direction of Gerdau SA i.e., Gerdau SA and Rbc Microcap go up and down completely randomly.

Pair Corralation between Gerdau SA and Rbc Microcap

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 2.22 times more return on investment than Rbc Microcap. However, Gerdau SA is 2.22 times more volatile than Rbc Microcap Value. It trades about 0.11 of its potential returns per unit of risk. Rbc Microcap Value is currently generating about 0.11 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gerdau SA ADR  vs.  Rbc Microcap Value

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 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.

Rbc Microcap Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Microcap Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Microcap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Gerdau SA and Rbc Microcap

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

The idea behind Gerdau SA ADR and Rbc Microcap Value 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.