Correlation Between Xurpas and Gerdau SA

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

By analyzing existing cross correlation between Xurpas Inc and Gerdau SA ADR, you can compare the effects of market volatilities on Xurpas and Gerdau SA 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 Xurpas with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xurpas and Gerdau SA.

Diversification Opportunities for Xurpas and Gerdau SA

0.45

Correlation Coefficient

Xurpas  Gerdau SA

Very weak diversification

The 3 months correlation between Xurpas and Gerdau is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xurpas Inc and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR and Xurpas 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 Xurpas Inc are associated (or correlated) with Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Xurpas i.e., Xurpas and Gerdau SA go up and down completely randomly.

Pair Corralation between Xurpas and Gerdau SA

Taking into account the 90-day investment horizon Xurpas Inc is expected to generate 1.64 times more return on investment than Gerdau SA. However, Xurpas is 1.64 times more volatile than Gerdau SA ADR. It trades about 0.25 of its potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.11 per unit of risk. If you would invest  4,048  in Xurpas Inc on May 7, 2025 and sell it today you would earn a total of  1,436  from holding Xurpas Inc or generate 35.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.46%
Values	Daily Returns

Xurpas Inc  vs.  Gerdau SA ADR

Xurpas Inc

Risk-Adjusted Performance

Solid

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

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.

Pair Trading with Xurpas and Gerdau SA

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

The idea behind Xurpas Inc and Gerdau SA ADR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.