Correlation Between ArcelorMittal and Ihuman

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

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

Diversification Opportunities for ArcelorMittal and Ihuman

0.14

Correlation Coefficient

ArcelorMittal  Ihuman

Average diversification

The 3 months correlation between ArcelorMittal and Ihuman is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc 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 ADR are associated (or correlated) with Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Ihuman go up and down completely randomly.

Pair Corralation between ArcelorMittal and Ihuman

Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to under-perform the Ihuman. But the stock apears to be less risky and, when comparing its historical volatility, ArcelorMittal SA ADR is 1.31 times less risky than Ihuman. The stock trades about -0.08 of its potential returns per unit of risk. The Ihuman Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Ihuman Inc on September 27, 2024 and sell it today you would earn a total of  19.90  from holding Ihuman Inc or generate 12.76% return on investment over 90 days.

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

ArcelorMittal SA ADR  vs.  Ihuman Inc

ArcelorMittal SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcelorMittal SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ihuman Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ihuman Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ArcelorMittal and Ihuman

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

The idea behind ArcelorMittal SA ADR and Ihuman Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.