Correlation Between ArcelorMittal and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Algoma Steel 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 ArcelorMittal and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA and Algoma Steel Group, you can compare the effects of market volatilities on ArcelorMittal and Algoma Steel 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 ArcelorMittal with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Algoma Steel.
Diversification Opportunities for ArcelorMittal and Algoma Steel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ArcelorMittal and Algoma is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and ArcelorMittal 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 ArcelorMittal SA are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Algoma Steel go up and down completely randomly.
Pair Corralation between ArcelorMittal and Algoma Steel
Assuming the 90 days horizon ArcelorMittal SA is expected to under-perform the Algoma Steel. But the pink sheet apears to be less risky and, when comparing its historical volatility, ArcelorMittal SA is 3.19 times less risky than Algoma Steel. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Algoma Steel Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Algoma Steel Group on August 27, 2024 and sell it today you would earn a total of 96.00 from holding Algoma Steel Group or generate 73.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.56% |
| Values | Daily Returns |
ArcelorMittal SA vs. Algoma Steel Group
Performance |
| Timeline |
| ArcelorMittal SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Algoma Steel Group |
ArcelorMittal and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Algoma Steel
The main advantage of trading using opposite ArcelorMittal and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Mesabi Trust | ArcelorMittal vs. Universal Stainless Alloy | ArcelorMittal vs. POSCO Holdings |
| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Evolv Technologies Holdings | Algoma Steel vs. Valens Semiconductor |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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