Correlation Between Tradegate and ArcelorMittal

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

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

Diversification Opportunities for Tradegate and ArcelorMittal

0.27

Correlation Coefficient

Tradegate  ArcelorMittal

Modest diversification

The 3 months correlation between Tradegate and ArcelorMittal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and ArcelorMittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal and Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Tradegate i.e., Tradegate and ArcelorMittal go up and down completely randomly.

Pair Corralation between Tradegate and ArcelorMittal

Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to under-perform the ArcelorMittal. But the stock apears to be less risky and, when comparing its historical volatility, Tradegate AG Wertpapierhandelsbank is 1.47 times less risky than ArcelorMittal. The stock trades about -0.04 of its potential returns per unit of risk. The ArcelorMittal is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,326  in ArcelorMittal on October 4, 2024 and sell it today you would lose (126.00) from holding ArcelorMittal or give up 5.42% of portfolio value over 90 days.

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

Tradegate AG Wertpapierhandels  vs.  ArcelorMittal

Tradegate AG Wertpap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tradegate and ArcelorMittal

The main advantage of trading using opposite Tradegate and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate 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 Tradegate AG Wertpapierhandelsbank 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.