Correlation Between ArcelorMittal and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Nippon Steel 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 Nippon Steel 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 Nippon Steel Corp, you can compare the effects of market volatilities on ArcelorMittal and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Nippon Steel.
Diversification Opportunities for ArcelorMittal and Nippon Steel
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Nippon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 SA ADR are associated (or correlated) with Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel Corp has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Nippon Steel go up and down completely randomly.
Pair Corralation between ArcelorMittal and Nippon Steel
Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to under-perform the Nippon Steel. In addition to that, ArcelorMittal is 1.12 times more volatile than Nippon Steel Corp. It trades about -0.12 of its total potential returns per unit of risk. Nippon Steel Corp is currently generating about 0.07 per unit of volatility. If you would invest 710.00 in Nippon Steel Corp on March 14, 2024 and sell it today you would earn a total of 17.00 from holding Nippon Steel Corp or generate 2.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ArcelorMittal SA ADR vs. Nippon Steel Corp
Performance |
Timeline |
ArcelorMittal SA ADR |
Nippon Steel Corp |
ArcelorMittal and Nippon Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ArcelorMittal and Nippon Steel
The main advantage of trading using opposite ArcelorMittal and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
Nippon Steel vs. Olympic Steel | Nippon Steel vs. POSCO Holdings | Nippon Steel vs. Steel Dynamics | Nippon Steel vs. Universal Stainless Alloy |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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