Correlation Between ArcelorMittal and Aalberts Industries

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

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

Diversification Opportunities for ArcelorMittal and Aalberts Industries

0.86

Correlation Coefficient

ArcelorMittal  Aalberts Industries

Very poor diversification

The 3 months correlation between ArcelorMittal and Aalberts is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries 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 are associated (or correlated) with Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and Aalberts Industries go up and down completely randomly.

Pair Corralation between ArcelorMittal and Aalberts Industries

Assuming the 90 days horizon ArcelorMittal is expected to generate 1.12 times less return on investment than Aalberts Industries. In addition to that, ArcelorMittal is 1.13 times more volatile than Aalberts Industries NV. It trades about 0.14 of its total potential returns per unit of risk. Aalberts Industries NV is currently generating about 0.17 per unit of volatility. If you would invest  2,664  in Aalberts Industries NV on April 22, 2025 and sell it today you would earn a total of  518.00  from holding Aalberts Industries NV or generate 19.44% return on investment over 90 days.

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

ArcelorMittal SA  vs.  Aalberts Industries NV

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.

Aalberts Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aalberts Industries NV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aalberts Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ArcelorMittal and Aalberts Industries

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

The idea behind ArcelorMittal SA and Aalberts Industries NV 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.