Correlation Between ArcelorMittal and Southern Copper
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on ArcelorMittal and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Southern Copper.
Diversification Opportunities for ArcelorMittal and Southern Copper
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Southern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Southern Copper go up and down completely randomly.
Pair Corralation between ArcelorMittal and Southern Copper
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 0.87 times more return on investment than Southern Copper. However, ArcelorMittal SA ADR is 1.14 times less risky than Southern Copper. It trades about 0.02 of its potential returns per unit of risk. Southern Copper is currently generating about -0.21 per unit of risk. If you would invest 2,470 in ArcelorMittal SA ADR on August 28, 2024 and sell it today you would earn a total of 16.00 from holding ArcelorMittal SA ADR or generate 0.65% 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. Southern Copper
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Southern Copper |
ArcelorMittal and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Southern Copper
The main advantage of trading using opposite ArcelorMittal and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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