Correlation Between Sif Holding and ArcelorMittal

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

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

Diversification Opportunities for Sif Holding and ArcelorMittal

0.49

Correlation Coefficient

Sif Holding  ArcelorMittal

Very weak diversification

The 3 months correlation between Sif and ArcelorMittal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sif Holding NV and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Sif Holding 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 Sif Holding NV 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 Sif Holding i.e., Sif Holding and ArcelorMittal go up and down completely randomly.

Pair Corralation between Sif Holding and ArcelorMittal

Assuming the 90 days trading horizon Sif Holding NV is expected to generate 1.47 times more return on investment than ArcelorMittal. However, Sif Holding is 1.47 times more volatile than ArcelorMittal SA. It trades about 0.04 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.04 per unit of risk. If you would invest  1,006  in Sif Holding NV on March 5, 2024 and sell it today you would earn a total of  12.00  from holding Sif Holding NV or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sif Holding NV  vs.  ArcelorMittal SA

Sif Holding NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sif Holding NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sif Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ArcelorMittal SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ArcelorMittal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sif Holding and ArcelorMittal

The main advantage of trading using opposite Sif Holding and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sif Holding 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 Sif Holding NV 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.