Correlation Between ArcelorMittal South and Coronation Global

Can any of the company-specific risk be diversified away by investing in both ArcelorMittal South and Coronation Global 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 South and Coronation Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ArcelorMittal South Africa and Coronation Global Equity, you can compare the effects of market volatilities on ArcelorMittal South and Coronation Global 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 South with a short position of Coronation Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal South and Coronation Global.

Diversification Opportunities for ArcelorMittal South and Coronation Global

-0.16

Correlation Coefficient

ArcelorMittal South  Coronation Global

Good diversification

The 3 months correlation between ArcelorMittal and Coronation is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal South Africa and Coronation Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Global Equity and ArcelorMittal South 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 South Africa are associated (or correlated) with Coronation Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Global Equity has no effect on the direction of ArcelorMittal South i.e., ArcelorMittal South and Coronation Global go up and down completely randomly.

Pair Corralation between ArcelorMittal South and Coronation Global

Assuming the 90 days trading horizon ArcelorMittal South is expected to generate 1.74 times less return on investment than Coronation Global. In addition to that, ArcelorMittal South is 5.33 times more volatile than Coronation Global Equity. It trades about 0.03 of its total potential returns per unit of risk. Coronation Global Equity is currently generating about 0.3 per unit of volatility. If you would invest  220.00  in Coronation Global Equity on September 14, 2024 and sell it today you would earn a total of  51.00  from holding Coronation Global Equity or generate 23.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ArcelorMittal South Africa  vs.  Coronation Global Equity

ArcelorMittal South

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal South Africa are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ArcelorMittal South may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coronation Global Equity

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Equity are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat inconsistent basic indicators, Coronation Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ArcelorMittal South and Coronation Global

The main advantage of trading using opposite ArcelorMittal South and Coronation Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal South position performs unexpectedly, Coronation Global 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 Coronation Global will offset losses from the drop in Coronation Global's long position.

The idea behind ArcelorMittal South Africa and Coronation Global Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.