Correlation Between Aperam PK and Cleveland Cliffs

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

By analyzing existing cross correlation between Aperam PK and Cleveland Cliffs, you can compare the effects of market volatilities on Aperam PK and Cleveland Cliffs 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 Aperam PK with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aperam PK and Cleveland Cliffs.

Diversification Opportunities for Aperam PK and Cleveland Cliffs

0.17

Correlation Coefficient

Aperam PK  Cleveland Cliffs

Average diversification

The 3 months correlation between Aperam and Cleveland is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and Aperam PK 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 Aperam PK are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Aperam PK i.e., Aperam PK and Cleveland Cliffs go up and down completely randomly.

Pair Corralation between Aperam PK and Cleveland Cliffs

Assuming the 90 days horizon Aperam PK is expected to generate 1.04 times more return on investment than Cleveland Cliffs. However, Aperam PK is 1.04 times more volatile than Cleveland Cliffs. It trades about -0.19 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about -0.53 per unit of risk. If you would invest  2,910  in Aperam PK on September 29, 2024 and sell it today you would lose (320.00) from holding Aperam PK or give up 11.0% of portfolio value over 90 days.

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

Aperam PK  vs.  Cleveland Cliffs

Aperam PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperam PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cleveland Cliffs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleveland Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aperam PK and Cleveland Cliffs

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

The idea behind Aperam PK and Cleveland Cliffs 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.