Correlation Between Lavide Holding and ArcelorMittal

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

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

Diversification Opportunities for Lavide Holding and ArcelorMittal

0.4

Correlation Coefficient

Lavide Holding  ArcelorMittal

Very weak diversification

The 3 months correlation between Lavide and ArcelorMittal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lavide Holding NV and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Lavide Holding 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 Lavide Holding NV 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 Lavide Holding i.e., Lavide Holding and ArcelorMittal go up and down completely randomly.

Pair Corralation between Lavide Holding and ArcelorMittal

Assuming the 90 days trading horizon Lavide Holding NV is expected to generate 1.72 times more return on investment than ArcelorMittal. However, Lavide Holding is 1.72 times more volatile than ArcelorMittal SA. It trades about 0.09 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.14 per unit of risk. If you would invest  45.00  in Lavide Holding NV on April 20, 2025 and sell it today you would earn a total of  8.00  from holding Lavide Holding NV or generate 17.78% return on investment over 90 days.

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

Lavide Holding NV  vs.  ArcelorMittal SA

Lavide Holding NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lavide Holding NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Lavide Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

ArcelorMittal SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ArcelorMittal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lavide Holding and ArcelorMittal

The main advantage of trading using opposite Lavide Holding and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavide Holding 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 Lavide Holding NV 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.