Correlation Between ArcelorMittal and WEBTOON Entertainment

Can any of the company-specific risk be diversified away by investing in both ArcelorMittal and WEBTOON Entertainment 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 WEBTOON Entertainment 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 WEBTOON Entertainment Common, you can compare the effects of market volatilities on ArcelorMittal and WEBTOON Entertainment 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 WEBTOON Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and WEBTOON Entertainment.

Diversification Opportunities for ArcelorMittal and WEBTOON Entertainment

0.15

Correlation Coefficient

ArcelorMittal  WEBTOON Entertainment

Average diversification

The 3 months correlation between ArcelorMittal and WEBTOON is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment 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 WEBTOON Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEBTOON Entertainment has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between ArcelorMittal and WEBTOON Entertainment

Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 0.35 times more return on investment than WEBTOON Entertainment. However, ArcelorMittal SA ADR is 2.83 times less risky than WEBTOON Entertainment. It trades about 0.02 of its potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about -0.05 per unit of risk. If you would invest  2,250  in ArcelorMittal SA ADR on September 25, 2024 and sell it today you would earn a total of  58.00  from holding ArcelorMittal SA ADR or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ArcelorMittal SA ADR  vs.  WEBTOON Entertainment Common

ArcelorMittal SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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.

WEBTOON Entertainment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WEBTOON Entertainment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ArcelorMittal and WEBTOON Entertainment

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

The idea behind ArcelorMittal SA ADR and WEBTOON Entertainment Common 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.