Correlation Between ArcelorMittal and Gulf Resources
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Gulf Resources 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 Gulf Resources 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 Gulf Resources, you can compare the effects of market volatilities on ArcelorMittal and Gulf Resources 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 Gulf Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Gulf Resources.
Diversification Opportunities for ArcelorMittal and Gulf Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ArcelorMittal and Gulf is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Gulf Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Resources 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 Gulf Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Resources has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Gulf Resources go up and down completely randomly.
Pair Corralation between ArcelorMittal and Gulf Resources
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 0.3 times more return on investment than Gulf Resources. However, ArcelorMittal SA ADR is 3.31 times less risky than Gulf Resources. It trades about 0.17 of its potential returns per unit of risk. Gulf Resources is currently generating about -0.09 per unit of risk. If you would invest 2,328 in ArcelorMittal SA ADR on August 24, 2024 and sell it today you would earn a total of 180.00 from holding ArcelorMittal SA ADR or generate 7.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
ArcelorMittal SA ADR vs. Gulf Resources
Performance |
Timeline |
ArcelorMittal SA ADR |
Gulf Resources |
ArcelorMittal and Gulf Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ArcelorMittal and Gulf Resources
The main advantage of trading using opposite ArcelorMittal and Gulf Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Gulf Resources 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 Gulf Resources will offset losses from the drop in Gulf Resources' long position.ArcelorMittal vs. Cleveland Cliffs | ArcelorMittal vs. United States Steel | ArcelorMittal vs. Reliance Steel Aluminum | ArcelorMittal vs. Nucor Corp |
Gulf Resources vs. Energy and Environmental | Gulf Resources vs. Alumifuel Pwr Corp | Gulf Resources vs. First Graphene | Gulf Resources vs. ASP Isotopes Common |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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