Correlation Between ArcelorMittal and CLEAN ENERGY

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

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

Diversification Opportunities for ArcelorMittal and CLEAN ENERGY

0.0

Correlation Coefficient

ArcelorMittal  CLEAN ENERGY

Pay attention - limited upside

The 3 months correlation between ArcelorMittal and CLEAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and CLEAN ENERGY FUELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEAN ENERGY FUELS 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 CLEAN ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEAN ENERGY FUELS has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and CLEAN ENERGY go up and down completely randomly.

Pair Corralation between ArcelorMittal and CLEAN ENERGY

If you would invest  255.00  in CLEAN ENERGY FUELS on October 24, 2024 and sell it today you would earn a total of  24.00  from holding CLEAN ENERGY FUELS or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ArcelorMittal SA  vs.  CLEAN ENERGY FUELS

ArcelorMittal SA

Risk-Adjusted Performance

0 of 100

Insignificant

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.

CLEAN ENERGY FUELS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLEAN ENERGY FUELS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CLEAN ENERGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ArcelorMittal and CLEAN ENERGY

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

The idea behind ArcelorMittal SA and CLEAN ENERGY FUELS 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.