Correlation Between ArcelorMittal and Ta Chen

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

By analyzing existing cross correlation between ArcelorMittal SA and Ta Chen Stainless, you can compare the effects of market volatilities on ArcelorMittal and Ta Chen 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 Ta Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Ta Chen.

Diversification Opportunities for ArcelorMittal and Ta Chen

0.93

Correlation Coefficient

ArcelorMittal  Ta Chen

Almost no diversification

The 3 months correlation between ArcelorMittal and 2027 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Ta Chen Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Chen Stainless 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 are associated (or correlated) with Ta Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Chen Stainless has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Ta Chen go up and down completely randomly.

Pair Corralation between ArcelorMittal and Ta Chen

Assuming the 90 days horizon ArcelorMittal is expected to generate 2.95 times less return on investment than Ta Chen. But when comparing it to its historical volatility, ArcelorMittal SA is 1.32 times less risky than Ta Chen. It trades about 0.15 of its potential returns per unit of risk. Ta Chen Stainless is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  3,030  in Ta Chen Stainless on December 29, 2024 and sell it today you would earn a total of  2,060  from holding Ta Chen Stainless or generate 67.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	91.8%
Values	Daily Returns

ArcelorMittal SA  vs.  Ta Chen Stainless

ArcelorMittal SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ArcelorMittal reported solid returns over the last few months and may actually be approaching a breakup point.

Ta Chen Stainless

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ta Chen Stainless are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ta Chen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ArcelorMittal and Ta Chen

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

The idea behind ArcelorMittal SA and Ta Chen Stainless 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.