Correlation Between ArcelorMittal and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and GEN Restaurant 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 GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on ArcelorMittal and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and GEN Restaurant.
Diversification Opportunities for ArcelorMittal and GEN Restaurant
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ArcelorMittal and GEN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and GEN Restaurant go up and down completely randomly.
Pair Corralation between ArcelorMittal and GEN Restaurant
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 0.43 times more return on investment than GEN Restaurant. However, ArcelorMittal SA ADR is 2.32 times less risky than GEN Restaurant. It trades about 0.09 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.05 per unit of risk. If you would invest 2,433 in ArcelorMittal SA ADR on August 31, 2024 and sell it today you would earn a total of 95.00 from holding ArcelorMittal SA ADR or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. GEN Restaurant Group,
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| GEN Restaurant Group, |
ArcelorMittal and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and GEN Restaurant
The main advantage of trading using opposite ArcelorMittal and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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