Correlation Between STMicroelectronics and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and ArcelorMittal 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 STMicroelectronics and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and ArcelorMittal SA, you can compare the effects of market volatilities on STMicroelectronics and ArcelorMittal 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 STMicroelectronics with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and ArcelorMittal.
Diversification Opportunities for STMicroelectronics and ArcelorMittal
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and ArcelorMittal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and STMicroelectronics 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 STMicroelectronics NV are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and ArcelorMittal go up and down completely randomly.
Pair Corralation between STMicroelectronics and ArcelorMittal
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the ArcelorMittal. In addition to that, STMicroelectronics is 1.32 times more volatile than ArcelorMittal SA. It trades about -0.07 of its total potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.04 per unit of volatility. If you would invest 2,138 in ArcelorMittal SA on September 14, 2024 and sell it today you would earn a total of 319.00 from holding ArcelorMittal SA or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
STMicroelectronics NV vs. ArcelorMittal SA
Performance |
| Timeline |
| STMicroelectronics |
| ArcelorMittal SA |
STMicroelectronics and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and ArcelorMittal
The main advantage of trading using opposite STMicroelectronics and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Superior Plus Corp | STMicroelectronics vs. SIVERS SEMICONDUCTORS AB |
| ArcelorMittal vs. AOYAMA TRADING | ArcelorMittal vs. STMicroelectronics NV | ArcelorMittal vs. Nucletron Electronic Aktiengesellschaft | ArcelorMittal vs. Samsung Electronics Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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