Correlation Between Centaur Bci and ArcelorMittal South

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

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

Diversification Opportunities for Centaur Bci and ArcelorMittal South

0.23

Correlation Coefficient

Centaur Bci  ArcelorMittal South

Modest diversification

The 3 months correlation between Centaur and ArcelorMittal is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and ArcelorMittal South Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal South and Centaur Bci 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 Centaur Bci Balanced are associated (or correlated) with ArcelorMittal South. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal South has no effect on the direction of Centaur Bci i.e., Centaur Bci and ArcelorMittal South go up and down completely randomly.

Pair Corralation between Centaur Bci and ArcelorMittal South

Assuming the 90 days trading horizon Centaur Bci is expected to generate 2.0 times less return on investment than ArcelorMittal South. But when comparing it to its historical volatility, Centaur Bci Balanced is 13.1 times less risky than ArcelorMittal South. It trades about 0.21 of its potential returns per unit of risk. ArcelorMittal South Africa is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,500  in ArcelorMittal South Africa on September 14, 2024 and sell it today you would earn a total of  200.00  from holding ArcelorMittal South Africa or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Centaur Bci Balanced  vs.  ArcelorMittal South Africa

Centaur Bci Balanced

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Bci Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Centaur Bci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ArcelorMittal South

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal South Africa are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ArcelorMittal South may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Centaur Bci and ArcelorMittal South

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

The idea behind Centaur Bci Balanced and ArcelorMittal South Africa 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.