Correlation Between ArcelorMittal and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on ArcelorMittal and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Kaiser Aluminum.
Diversification Opportunities for ArcelorMittal and Kaiser Aluminum
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ArcelorMittal and Kaiser is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between ArcelorMittal and Kaiser Aluminum
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 1.78 times more return on investment than Kaiser Aluminum. However, ArcelorMittal is 1.78 times more volatile than Kaiser Aluminum. It trades about 0.32 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.09 per unit of risk. If you would invest 2,326 in ArcelorMittal SA ADR on November 18, 2024 and sell it today you would earn a total of 531.00 from holding ArcelorMittal SA ADR or generate 22.83% 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. Kaiser Aluminum
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Kaiser Aluminum |
ArcelorMittal and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Kaiser Aluminum
The main advantage of trading using opposite ArcelorMittal and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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