Correlation Between Yamaha and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Yamaha 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 Yamaha and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha and ArcelorMittal, you can compare the effects of market volatilities on Yamaha 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 Yamaha with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and ArcelorMittal.
Diversification Opportunities for Yamaha and ArcelorMittal
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yamaha and ArcelorMittal is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha and ArcelorMittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal and Yamaha 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 Yamaha 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 has no effect on the direction of Yamaha i.e., Yamaha and ArcelorMittal go up and down completely randomly.
Pair Corralation between Yamaha and ArcelorMittal
Assuming the 90 days horizon Yamaha is expected to under-perform the ArcelorMittal. In addition to that, Yamaha is 1.56 times more volatile than ArcelorMittal. It trades about -0.12 of its total potential returns per unit of risk. ArcelorMittal is currently generating about 0.06 per unit of volatility. If you would invest 2,257 in ArcelorMittal on August 31, 2024 and sell it today you would earn a total of 63.00 from holding ArcelorMittal or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yamaha vs. ArcelorMittal
Performance |
| Timeline |
| Yamaha |
| ArcelorMittal |
Yamaha and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and ArcelorMittal
The main advantage of trading using opposite Yamaha and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha 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.| Yamaha vs. Li Ning Company | Yamaha vs. Trip Group Limited | Yamaha vs. Superior Plus Corp | Yamaha vs. NMI Holdings |
| ArcelorMittal vs. Gaztransport Technigaz SA | ArcelorMittal vs. Transportadora de Gas | ArcelorMittal vs. Broadcom | ArcelorMittal vs. Lion Biotechnologies |
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 CEOs Directory module to screen CEOs from public companies around the world.
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