Correlation Between Unipar Carbocloro and ArcelorMittal

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

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

Diversification Opportunities for Unipar Carbocloro and ArcelorMittal

0.21

Correlation Coefficient

Unipar Carbocloro  ArcelorMittal

Modest diversification

The 3 months correlation between Unipar and ArcelorMittal is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Unipar Carbocloro SA and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Unipar Carbocloro 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 Unipar Carbocloro SA are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Unipar Carbocloro i.e., Unipar Carbocloro and ArcelorMittal go up and down completely randomly.

Pair Corralation between Unipar Carbocloro and ArcelorMittal

Assuming the 90 days trading horizon Unipar Carbocloro is expected to generate 2.03 times less return on investment than ArcelorMittal. But when comparing it to its historical volatility, Unipar Carbocloro SA is 1.12 times less risky than ArcelorMittal. It trades about 0.09 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Unipar Carbocloro SA  vs.  ArcelorMittal SA

Unipar Carbocloro

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Unipar Carbocloro and ArcelorMittal

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

The idea behind Unipar Carbocloro SA and ArcelorMittal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.