Correlation Between Aperam PK and ArcelorMittal

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

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

Diversification Opportunities for Aperam PK and ArcelorMittal

0.63

Correlation Coefficient

Aperam PK  ArcelorMittal

Poor diversification

The 3 months correlation between Aperam and ArcelorMittal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Aperam PK 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 Aperam PK 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 SA has no effect on the direction of Aperam PK i.e., Aperam PK and ArcelorMittal go up and down completely randomly.

Pair Corralation between Aperam PK and ArcelorMittal

Assuming the 90 days horizon Aperam PK is expected to generate 18.5 times less return on investment than ArcelorMittal. But when comparing it to its historical volatility, Aperam PK is 1.18 times less risky than ArcelorMittal. It trades about 0.01 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,700  in ArcelorMittal SA on May 4, 2025 and sell it today you would earn a total of  463.00  from holding ArcelorMittal SA or generate 17.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Aperam PK  vs.  ArcelorMittal SA

Aperam PK

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aperam PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Aperam PK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ArcelorMittal SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ArcelorMittal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aperam PK and ArcelorMittal

The main advantage of trading using opposite Aperam PK and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aperam PK 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 Aperam PK and ArcelorMittal SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.