Correlation Between ArcelorMittal and Zapata Computing

Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Zapata Computing 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 Zapata Computing 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 Zapata Computing Holdings, you can compare the effects of market volatilities on ArcelorMittal and Zapata Computing 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 Zapata Computing. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Zapata Computing.

Diversification Opportunities for ArcelorMittal and Zapata Computing

-0.34

Correlation Coefficient

ArcelorMittal  Zapata Computing

Very good diversification

The 3 months correlation between ArcelorMittal and Zapata is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Zapata Computing Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapata Computing Holdings 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 Zapata Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapata Computing Holdings has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Zapata Computing go up and down completely randomly.

Pair Corralation between ArcelorMittal and Zapata Computing

Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 0.09 times more return on investment than Zapata Computing. However, ArcelorMittal SA ADR is 10.98 times less risky than Zapata Computing. It trades about 0.05 of its potential returns per unit of risk. Zapata Computing Holdings is currently generating about -0.28 per unit of risk. If you would invest  2,327  in ArcelorMittal SA ADR on September 18, 2024 and sell it today you would earn a total of  126.00  from holding ArcelorMittal SA ADR or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.97%
Values	Daily Returns

ArcelorMittal SA ADR  vs.  Zapata Computing Holdings

ArcelorMittal SA ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA ADR are ranked lower than 3 (%) 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.

Zapata Computing Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zapata Computing Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ArcelorMittal and Zapata Computing

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

The idea behind ArcelorMittal SA ADR and Zapata Computing Holdings 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.