Correlation Between AK Steel and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both AK Steel 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 AK Steel and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AK Steel Holding and ArcelorMittal SA ADR, you can compare the effects of market volatilities on AK Steel 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 AK Steel with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AK Steel and ArcelorMittal.
Diversification Opportunities for AK Steel and ArcelorMittal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AKS and ArcelorMittal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AK Steel Holding and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and AK Steel 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 AK Steel Holding 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 ADR has no effect on the direction of AK Steel i.e., AK Steel and ArcelorMittal go up and down completely randomly.
Pair Corralation between AK Steel and ArcelorMittal
If you would invest (100.00) in AK Steel Holding on January 26, 2024 and sell it today you would earn a total of 100.00 from holding AK Steel Holding or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
AK Steel Holding vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| AK Steel Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ArcelorMittal SA ADR |
AK Steel and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AK Steel and ArcelorMittal
The main advantage of trading using opposite AK Steel and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AK Steel 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.| AK Steel vs. Tesla Inc | AK Steel vs. FDG Electric Vehicles | AK Steel vs. Bank of America | AK Steel vs. Modine Manufacturing |
| ArcelorMittal vs. Cleveland Cliffs | ArcelorMittal vs. Reliance Steel Aluminum | ArcelorMittal vs. Ternium SA ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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