Correlation Between Acerinox and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Acerinox and ArcelorMittal 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 Acerinox and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acerinox SA ADR and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Acerinox and ArcelorMittal 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 Acerinox with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acerinox and ArcelorMittal.
Diversification Opportunities for Acerinox and ArcelorMittal
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Acerinox and ArcelorMittal is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox SA ADR and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and Acerinox 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 Acerinox SA ADR are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Acerinox i.e., Acerinox and ArcelorMittal go up and down completely randomly.
Pair Corralation between Acerinox and ArcelorMittal
Assuming the 90 days horizon Acerinox SA ADR is expected to generate 1.2 times more return on investment than ArcelorMittal. However, Acerinox is 1.2 times more volatile than ArcelorMittal SA ADR. It trades about 0.0 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.01 per unit of risk. If you would invest 538.00 in Acerinox SA ADR on September 12, 2024 and sell it today you would lose (25.00) from holding Acerinox SA ADR or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.18% |
| Values | Daily Returns |
Acerinox SA ADR vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| Acerinox SA ADR |
| ArcelorMittal SA ADR |
Acerinox and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acerinox and ArcelorMittal
The main advantage of trading using opposite Acerinox and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acerinox position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Acerinox vs. ArcelorMittal SA ADR | Acerinox vs. Gerdau SA ADR | Acerinox vs. POSCO Holdings | Acerinox vs. HUMANA INC |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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