Correlation Between ArcelorMittal and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Olympic Steel 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 Olympic Steel 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 Olympic Steel, you can compare the effects of market volatilities on ArcelorMittal and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Olympic Steel.
Diversification Opportunities for ArcelorMittal and Olympic Steel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ArcelorMittal and Olympic is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Olympic Steel go up and down completely randomly.
Pair Corralation between ArcelorMittal and Olympic Steel
Allowing for the 90-day total investment horizon ArcelorMittal is expected to generate 13.25 times less return on investment than Olympic Steel. But when comparing it to its historical volatility, ArcelorMittal SA ADR is 1.9 times less risky than Olympic Steel. It trades about 0.02 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,807 in Olympic Steel on August 27, 2024 and sell it today you would earn a total of 495.00 from holding Olympic Steel or generate 13.0% 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. Olympic Steel
Performance |
| Timeline |
| ArcelorMittal SA ADR |
| Olympic Steel |
ArcelorMittal and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Olympic Steel
The main advantage of trading using opposite ArcelorMittal and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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