Correlation Between ArcelorMittal and Universal Stainless
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Universal Stainless 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 Universal Stainless 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 Universal Stainless Alloy, you can compare the effects of market volatilities on ArcelorMittal and Universal Stainless 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 Universal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Universal Stainless.
Diversification Opportunities for ArcelorMittal and Universal Stainless
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between ArcelorMittal and Universal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Universal Stainless go up and down completely randomly.
Pair Corralation between ArcelorMittal and Universal Stainless
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 5.77 times more return on investment than Universal Stainless. However, ArcelorMittal is 5.77 times more volatile than Universal Stainless Alloy. It trades about 0.21 of its potential returns per unit of risk. Universal Stainless Alloy is currently generating about 0.59 per unit of risk. If you would invest 2,286 in ArcelorMittal SA ADR on November 3, 2024 and sell it today you would earn a total of 185.00 from holding ArcelorMittal SA ADR or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.0% |
| Values | Daily Returns |
ArcelorMittal SA ADR vs. Universal Stainless Alloy
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Universal Stainless Alloy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
ArcelorMittal and Universal Stainless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Universal Stainless
The main advantage of trading using opposite ArcelorMittal and Universal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Universal Stainless 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 Universal Stainless will offset losses from the drop in Universal Stainless' long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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