Correlation Between ArcelorMittal and Red Branch

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Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and Red Branch 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 Red Branch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA ADR and Red Branch Technologies, you can compare the effects of market volatilities on ArcelorMittal and Red Branch 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 Red Branch. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Red Branch.

Diversification Opportunities for ArcelorMittal and Red Branch

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between ArcelorMittal and Red Branch

If you would invest  2,416  in ArcelorMittal SA ADR on September 21, 2024 and sell it today you would lose (99.00) from holding ArcelorMittal SA ADR or give up 4.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ArcelorMittal SA ADR  vs.  Red Branch Technologies

 Performance 
       Timeline  
ArcelorMittal SA ADR 

Risk-Adjusted Performance

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Over the last 90 days ArcelorMittal SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ArcelorMittal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Red Branch Technologies 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Red Branch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Red Branch is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ArcelorMittal and Red Branch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ArcelorMittal and Red Branch

The main advantage of trading using opposite ArcelorMittal and Red Branch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal position performs unexpectedly, Red Branch 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 Red Branch will offset losses from the drop in Red Branch's long position.
The idea behind ArcelorMittal SA ADR and Red Branch Technologies 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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