Correlation Between ArcelorMittal and Acerinox
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Acerinox 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 Acerinox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA ADR and Acerinox SA ADR, you can compare the effects of market volatilities on ArcelorMittal and Acerinox 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 Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Acerinox.
Diversification Opportunities for ArcelorMittal and Acerinox
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between ArcelorMittal and Acerinox is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Acerinox SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox SA ADR 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 ADR are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox SA ADR has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Acerinox go up and down completely randomly.
Pair Corralation between ArcelorMittal and Acerinox
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to under-perform the Acerinox. But the stock apears to be less risky and, when comparing its historical volatility, ArcelorMittal SA ADR is 1.75 times less risky than Acerinox. The stock trades about 0.0 of its potential returns per unit of risk. The Acerinox SA ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 479.00 in Acerinox SA ADR on August 27, 2024 and sell it today you would earn a total of 26.00 from holding Acerinox SA ADR or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.69% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Acerinox SA ADR
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Acerinox SA ADR |
ArcelorMittal and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Acerinox
The main advantage of trading using opposite ArcelorMittal and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Acerinox vs. Algoma Steel Group | Acerinox vs. Synalloy | Acerinox vs. Algoma Steel Group | Acerinox vs. Aperam PK |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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