Correlation Between Easy Software and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and ArcelorMittal, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and ArcelorMittal.
Diversification Opportunities for Easy Software and ArcelorMittal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Easy and ArcelorMittal is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and ArcelorMittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal and Easy Software 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 Easy Software AG 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 has no effect on the direction of Easy Software i.e., Easy Software and ArcelorMittal go up and down completely randomly.
Pair Corralation between Easy Software and ArcelorMittal
Assuming the 90 days trading horizon Easy Software AG is expected to under-perform the ArcelorMittal. But the stock apears to be less risky and, when comparing its historical volatility, Easy Software AG is 3.33 times less risky than ArcelorMittal. The stock trades about -0.01 of its potential returns per unit of risk. The ArcelorMittal is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,440 in ArcelorMittal on December 8, 2024 and sell it today you would earn a total of 520.00 from holding ArcelorMittal or generate 21.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. ArcelorMittal
Performance |
| Timeline |
| Easy Software AG |
| ArcelorMittal |
Easy Software and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and ArcelorMittal
The main advantage of trading using opposite Easy Software and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. DALATA HOTEL | ||
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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