Correlation Between POSCO Holdings and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both POSCO Holdings 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 POSCO Holdings and ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO Holdings and ArcelorMittal SA ADR, you can compare the effects of market volatilities on POSCO Holdings 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 POSCO Holdings with a short position of ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO Holdings and ArcelorMittal.
Diversification Opportunities for POSCO Holdings and ArcelorMittal
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between POSCO and ArcelorMittal is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding POSCO Holdings and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and POSCO Holdings 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 POSCO Holdings 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 ADR has no effect on the direction of POSCO Holdings i.e., POSCO Holdings and ArcelorMittal go up and down completely randomly.
Pair Corralation between POSCO Holdings and ArcelorMittal
Considering the 90-day investment horizon POSCO Holdings is expected to under-perform the ArcelorMittal. But the stock apears to be less risky and, when comparing its historical volatility, POSCO Holdings is 1.23 times less risky than ArcelorMittal. The stock trades about -0.04 of its potential returns per unit of risk. The ArcelorMittal SA ADR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,119 in ArcelorMittal SA ADR on March 9, 2025 and sell it today you would lose (108.00) from holding ArcelorMittal SA ADR or give up 3.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO Holdings vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| POSCO Holdings |
| ArcelorMittal SA ADR |
POSCO Holdings and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO Holdings and ArcelorMittal
The main advantage of trading using opposite POSCO Holdings and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO Holdings 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.| POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR | POSCO Holdings vs. Steel Dynamics |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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