Correlation Between Blue Label and ArcelorMittal South

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

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

Diversification Opportunities for Blue Label and ArcelorMittal South

-0.58

Correlation Coefficient

Blue Label  ArcelorMittal South

Excellent diversification

The 3 months correlation between Blue and ArcelorMittal is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Blue Label Telecoms and ArcelorMittal South Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal South and Blue Label 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 Blue Label Telecoms 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 Blue Label i.e., Blue Label and ArcelorMittal South go up and down completely randomly.

Pair Corralation between Blue Label and ArcelorMittal South

Assuming the 90 days trading horizon Blue Label Telecoms is expected to generate 0.26 times more return on investment than ArcelorMittal South. However, Blue Label Telecoms is 3.9 times less risky than ArcelorMittal South. It trades about 0.26 of its potential returns per unit of risk. ArcelorMittal South Africa is currently generating about 0.02 per unit of risk. If you would invest  57,700  in Blue Label Telecoms on December 25, 2024 and sell it today you would earn a total of  20,100  from holding Blue Label Telecoms or generate 34.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Blue Label Telecoms  vs.  ArcelorMittal South Africa

Blue Label Telecoms

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Label Telecoms are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Blue Label exhibited solid returns over the last few months and may actually be approaching a breakup point.

ArcelorMittal South

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal South Africa are ranked lower than 1 (%) 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 April 2025.

Pair Trading with Blue Label and ArcelorMittal South

The main advantage of trading using opposite Blue Label and ArcelorMittal South positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Label 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 Blue Label Telecoms 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..