Correlation Between Gerdau SA and United States

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

Diversification Opportunities for Gerdau SA and United States

-0.26

Correlation Coefficient

Gerdau SA  United States

Very good diversification

The 3 months correlation between Gerdau and United is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Gerdau SA i.e., Gerdau SA and United States go up and down completely randomly.

Pair Corralation between Gerdau SA and United States

Considering the 90-day investment horizon Gerdau SA is expected to generate 3.75 times less return on investment than United States. But when comparing it to its historical volatility, Gerdau SA ADR is 1.65 times less risky than United States. It trades about 0.11 of its potential returns per unit of risk. United States Steel is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,048  in United States Steel on May 7, 2025 and sell it today you would earn a total of  1,436  from holding United States Steel or generate 35.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.61%
Values	Daily Returns

Gerdau SA ADR  vs.  United States Steel

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.

United States Steel

Risk-Adjusted Performance

Solid

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile basic indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gerdau SA and United States

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

The idea behind Gerdau SA ADR and United States Steel 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.