Correlation Between Suntory Beverage and ArcelorMittal

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

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

Diversification Opportunities for Suntory Beverage and ArcelorMittal

-0.36

Correlation Coefficient

Suntory Beverage  ArcelorMittal

Very good diversification

The 3 months correlation between Suntory and ArcelorMittal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Suntory Beverage 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 Suntory Beverage Food 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 Suntory Beverage i.e., Suntory Beverage and ArcelorMittal go up and down completely randomly.

Pair Corralation between Suntory Beverage and ArcelorMittal

Assuming the 90 days horizon Suntory Beverage Food is expected to generate 0.92 times more return on investment than ArcelorMittal. However, Suntory Beverage Food is 1.08 times less risky than ArcelorMittal. It trades about 0.03 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about -0.13 per unit of risk. If you would invest  3,034  in Suntory Beverage Food on October 9, 2024 and sell it today you would earn a total of  42.00  from holding Suntory Beverage Food or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.37%
Values	Daily Returns

Suntory Beverage Food  vs.  ArcelorMittal SA

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Suntory Beverage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ArcelorMittal SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcelorMittal SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ArcelorMittal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Suntory Beverage and ArcelorMittal

The main advantage of trading using opposite Suntory Beverage and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage 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 Suntory Beverage Food 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.