Correlation Between ArcelorMittal and AFC Ajax
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and AFC Ajax 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 AFC Ajax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA and AFC Ajax NV, you can compare the effects of market volatilities on ArcelorMittal and AFC Ajax 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 AFC Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and AFC Ajax.
Diversification Opportunities for ArcelorMittal and AFC Ajax
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ArcelorMittal and AFC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and AFC Ajax NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Ajax NV 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 AFC Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Ajax NV has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and AFC Ajax go up and down completely randomly.
Pair Corralation between ArcelorMittal and AFC Ajax
Assuming the 90 days horizon ArcelorMittal SA is expected to generate 2.73 times more return on investment than AFC Ajax. However, ArcelorMittal is 2.73 times more volatile than AFC Ajax NV. It trades about 0.05 of its potential returns per unit of risk. AFC Ajax NV is currently generating about 0.05 per unit of risk. If you would invest 2,270 in ArcelorMittal SA on August 30, 2024 and sell it today you would earn a total of 45.00 from holding ArcelorMittal SA or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA vs. AFC Ajax NV
Performance |
| Timeline |
| ArcelorMittal SA |
| AFC Ajax NV |
ArcelorMittal and AFC Ajax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and AFC Ajax
The main advantage of trading using opposite ArcelorMittal and AFC Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, AFC Ajax 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 AFC Ajax will offset losses from the drop in AFC Ajax's long position.| ArcelorMittal vs. ING Groep NV | ArcelorMittal vs. Aegon NV | ArcelorMittal vs. Compagnie de Saint Gobain | ArcelorMittal vs. Koninklijke Philips NV |
| AFC Ajax vs. Allfunds Group | AFC Ajax vs. Reinet Investments SCA | AFC Ajax vs. Flow Traders BV | AFC Ajax vs. Sligro Food Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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