Correlation Between ArcelorMittal and Superior Plus

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

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

Diversification Opportunities for ArcelorMittal and Superior Plus

-0.59

Correlation Coefficient

ArcelorMittal  Superior Plus

Excellent diversification

The 3 months correlation between ArcelorMittal and Superior is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Superior Plus go up and down completely randomly.

Pair Corralation between ArcelorMittal and Superior Plus

Assuming the 90 days trading horizon ArcelorMittal is expected to generate 0.63 times more return on investment than Superior Plus. However, ArcelorMittal is 1.58 times less risky than Superior Plus. It trades about 0.16 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.03 per unit of risk. If you would invest  1,970  in ArcelorMittal on September 13, 2024 and sell it today you would earn a total of  470.00  from holding ArcelorMittal or generate 23.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

ArcelorMittal  vs.  Superior Plus Corp

ArcelorMittal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ArcelorMittal reported solid returns over the last few months and may actually be approaching a breakup point.

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ArcelorMittal and Superior Plus

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

The idea behind ArcelorMittal and Superior Plus Corp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.