Correlation Between Klckner Co and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Klckner Co 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 Klckner Co and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klckner Co SE and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Klckner Co 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 Klckner Co with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klckner Co and ArcelorMittal.
Diversification Opportunities for Klckner Co and ArcelorMittal
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Klckner and ArcelorMittal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Klckner Co SE 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 Klckner Co 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 Klckner Co SE 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 Klckner Co i.e., Klckner Co and ArcelorMittal go up and down completely randomly.
Pair Corralation between Klckner Co and ArcelorMittal
Assuming the 90 days horizon Klckner Co SE is expected to under-perform the ArcelorMittal. But the pink sheet apears to be less risky and, when comparing its historical volatility, Klckner Co SE is 1.3 times less risky than ArcelorMittal. The pink sheet trades about -0.06 of its potential returns per unit of risk. The ArcelorMittal SA ADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,328 in ArcelorMittal SA ADR on August 24, 2024 and sell it today you would earn a total of 201.00 from holding ArcelorMittal SA ADR or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klckner Co SE vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| Klckner Co SE |
| ArcelorMittal SA ADR |
Klckner Co and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klckner Co and ArcelorMittal
The main advantage of trading using opposite Klckner Co and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klckner Co 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.| Klckner Co vs. ArcelorMittal SA ADR | Klckner Co vs. Gerdau SA ADR | Klckner Co vs. POSCO Holdings | Klckner Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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