Correlation Between ArcelorMittal and Unipar Carbocloro

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

By analyzing existing cross correlation between ArcelorMittal SA and Unipar Carbocloro SA, you can compare the effects of market volatilities on ArcelorMittal and Unipar Carbocloro 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 Unipar Carbocloro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Unipar Carbocloro.

Diversification Opportunities for ArcelorMittal and Unipar Carbocloro

0.4

Correlation Coefficient

ArcelorMittal  Unipar Carbocloro

Very weak diversification

The 3 months correlation between ArcelorMittal and Unipar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Unipar Carbocloro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipar Carbocloro 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 are associated (or correlated) with Unipar Carbocloro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipar Carbocloro has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Unipar Carbocloro go up and down completely randomly.

Pair Corralation between ArcelorMittal and Unipar Carbocloro

Assuming the 90 days trading horizon ArcelorMittal SA is expected to generate 0.59 times more return on investment than Unipar Carbocloro. However, ArcelorMittal SA is 1.7 times less risky than Unipar Carbocloro. It trades about 0.17 of its potential returns per unit of risk. Unipar Carbocloro SA is currently generating about 0.09 per unit of risk. If you would invest  6,154  in ArcelorMittal SA on September 4, 2024 and sell it today you would earn a total of  1,514  from holding ArcelorMittal SA or generate 24.6% return on investment over 90 days.

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

ArcelorMittal SA  vs.  Unipar Carbocloro SA

ArcelorMittal SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, ArcelorMittal sustained solid returns over the last few months and may actually be approaching a breakup point.

Unipar Carbocloro

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ArcelorMittal and Unipar Carbocloro

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

The idea behind ArcelorMittal SA and Unipar Carbocloro SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.