Correlation Between DAX Index and ArcelorMittal South

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

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

Diversification Opportunities for DAX Index and ArcelorMittal South

0.0

Correlation Coefficient

DAX Index  ArcelorMittal South

Pay attention - limited upside

The 3 months correlation between DAX and ArcelorMittal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and ArcelorMittal South Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal South and DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and ArcelorMittal South go up and down completely randomly.

Pair Corralation between DAX Index and ArcelorMittal South

If you would invest  1,937,383  in DAX Index on October 11, 2024 and sell it today you would earn a total of  95,611  from holding DAX Index or generate 4.94% return on investment over 90 days.

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

DAX Index  vs.  ArcelorMittal South Africa

Pair Trading with DAX Index and ArcelorMittal South

The main advantage of trading using opposite DAX Index and ArcelorMittal South positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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 DAX Index 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.