Correlation Between ArcelorMittal and 539830BX6

Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and 539830BX6 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 539830BX6 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 LMT 57 15 NOV 54, you can compare the effects of market volatilities on ArcelorMittal and 539830BX6 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 539830BX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and 539830BX6.

Diversification Opportunities for ArcelorMittal and 539830BX6

-0.32

Correlation Coefficient

ArcelorMittal  539830BX6

Very good diversification

The 3 months correlation between ArcelorMittal and 539830BX6 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and LMT 57 15 NOV 54 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMT 57 15 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 539830BX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMT 57 15 has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and 539830BX6 go up and down completely randomly.

Pair Corralation between ArcelorMittal and 539830BX6

Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 2.17 times more return on investment than 539830BX6. However, ArcelorMittal is 2.17 times more volatile than LMT 57 15 NOV 54. It trades about 0.06 of its potential returns per unit of risk. LMT 57 15 NOV 54 is currently generating about -0.08 per unit of risk. If you would invest  2,307  in ArcelorMittal SA ADR on September 17, 2024 and sell it today you would earn a total of  158.00  from holding ArcelorMittal SA ADR or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

ArcelorMittal SA ADR  vs.  LMT 57 15 NOV 54

ArcelorMittal SA ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ArcelorMittal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LMT 57 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMT 57 15 NOV 54 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 539830BX6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ArcelorMittal and 539830BX6

The main advantage of trading using opposite ArcelorMittal and 539830BX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, 539830BX6 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 539830BX6 will offset losses from the drop in 539830BX6's long position.

The idea behind ArcelorMittal SA ADR and LMT 57 15 NOV 54 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.