Correlation Between Relx PLC and ArcelorMittal

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

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

Diversification Opportunities for Relx PLC and ArcelorMittal

0.0

Correlation Coefficient

Relx PLC  ArcelorMittal

Pay attention - limited upside

The 3 months correlation between Relx and ArcelorMittal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Relx PLC and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Relx PLC 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 Relx PLC 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 Relx PLC i.e., Relx PLC and ArcelorMittal go up and down completely randomly.

Pair Corralation between Relx PLC and ArcelorMittal

Assuming the 90 days trading horizon Relx PLC is expected to generate 8.18 times less return on investment than ArcelorMittal. But when comparing it to its historical volatility, Relx PLC is 2.13 times less risky than ArcelorMittal. It trades about 0.04 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,397  in ArcelorMittal SA on April 19, 2025 and sell it today you would earn a total of  426.00  from holding ArcelorMittal SA or generate 17.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Relx PLC  vs.  ArcelorMittal SA

Relx PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Relx PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Relx PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ArcelorMittal SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA are ranked lower than 11 (%) 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 Relx PLC and ArcelorMittal

The main advantage of trading using opposite Relx PLC and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relx PLC 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 Relx PLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.