Correlation Between ArcelorMittal and Global Ship
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on ArcelorMittal and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Global Ship.
Diversification Opportunities for ArcelorMittal and Global Ship
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Global is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Global Ship go up and down completely randomly.
Pair Corralation between ArcelorMittal and Global Ship
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 2.44 times more return on investment than Global Ship. However, ArcelorMittal is 2.44 times more volatile than Global Ship Lease. It trades about 0.01 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.01 per unit of risk. If you would invest 2,526 in ArcelorMittal SA ADR on September 3, 2024 and sell it today you would earn a total of 2.00 from holding ArcelorMittal SA ADR or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Global Ship Lease
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Global Ship Lease |
ArcelorMittal and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Global Ship
The main advantage of trading using opposite ArcelorMittal and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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