Correlation Between ArcelorMittal and Usinas Siderurgicas
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Usinas Siderurgicas 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 Usinas Siderurgicas 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 Usinas Siderurgicas de, you can compare the effects of market volatilities on ArcelorMittal and Usinas Siderurgicas 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 Usinas Siderurgicas. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Usinas Siderurgicas.
Diversification Opportunities for ArcelorMittal and Usinas Siderurgicas
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Usinas is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Usinas Siderurgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderurgicas 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 Usinas Siderurgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderurgicas has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Usinas Siderurgicas go up and down completely randomly.
Pair Corralation between ArcelorMittal and Usinas Siderurgicas
Allowing for the 90-day total investment horizon ArcelorMittal is expected to generate 1.64 times less return on investment than Usinas Siderurgicas. But when comparing it to its historical volatility, ArcelorMittal SA ADR is 2.37 times less risky than Usinas Siderurgicas. It trades about 0.21 of its potential returns per unit of risk. Usinas Siderurgicas de is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Usinas Siderurgicas de on November 3, 2024 and sell it today you would earn a total of 11.00 from holding Usinas Siderurgicas de or generate 12.09% 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. Usinas Siderurgicas de
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Usinas Siderurgicas |
ArcelorMittal and Usinas Siderurgicas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Usinas Siderurgicas
The main advantage of trading using opposite ArcelorMittal and Usinas Siderurgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Usinas Siderurgicas 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 Usinas Siderurgicas will offset losses from the drop in Usinas Siderurgicas' long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
| Usinas Siderurgicas vs. Olympic Steel | Usinas Siderurgicas vs. Mesabi Trust | Usinas Siderurgicas vs. Outokumpu Oyj ADR | Usinas Siderurgicas 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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