Correlation Between DAIRY FARM and ArcelorMittal

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

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

Diversification Opportunities for DAIRY FARM and ArcelorMittal

0.58

Correlation Coefficient

DAIRY FARM  ArcelorMittal

Very weak diversification

The 3 months correlation between DAIRY and ArcelorMittal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and ArcelorMittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal and DAIRY FARM 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 DAIRY FARM INTL 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 has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and ArcelorMittal go up and down completely randomly.

Pair Corralation between DAIRY FARM and ArcelorMittal

Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.75 times more return on investment than ArcelorMittal. However, DAIRY FARM INTL is 1.32 times less risky than ArcelorMittal. It trades about 0.01 of its potential returns per unit of risk. ArcelorMittal is currently generating about -0.01 per unit of risk. If you would invest  220.00  in DAIRY FARM INTL on October 6, 2024 and sell it today you would earn a total of  0.00  from holding DAIRY FARM INTL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

DAIRY FARM INTL  vs.  ArcelorMittal

DAIRY FARM INTL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DAIRY FARM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ArcelorMittal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcelorMittal 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DAIRY FARM and ArcelorMittal

The main advantage of trading using opposite DAIRY FARM and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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 DAIRY FARM INTL and ArcelorMittal 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.