Correlation Between ALGOMA STEEL and KRAKATAU STEEL
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and KRAKATAU STEEL 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 ALGOMA STEEL and KRAKATAU STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALGOMA STEEL GROUP and KRAKATAU STEEL B , you can compare the effects of market volatilities on ALGOMA STEEL and KRAKATAU STEEL 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 ALGOMA STEEL with a short position of KRAKATAU STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and KRAKATAU STEEL.
Diversification Opportunities for ALGOMA STEEL and KRAKATAU STEEL
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ALGOMA and KRAKATAU is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and KRAKATAU STEEL B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAKATAU STEEL B and ALGOMA STEEL 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 ALGOMA STEEL GROUP are associated (or correlated) with KRAKATAU STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAKATAU STEEL B has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and KRAKATAU STEEL go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and KRAKATAU STEEL
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the KRAKATAU STEEL. But the stock apears to be less risky and, when comparing its historical volatility, ALGOMA STEEL GROUP is 2.41 times less risky than KRAKATAU STEEL. The stock trades about -0.43 of its potential returns per unit of risk. The KRAKATAU STEEL B is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.85 in KRAKATAU STEEL B on December 4, 2024 and sell it today you would earn a total of 0.15 from holding KRAKATAU STEEL B or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. KRAKATAU STEEL B
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| KRAKATAU STEEL B |
ALGOMA STEEL and KRAKATAU STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and KRAKATAU STEEL
The main advantage of trading using opposite ALGOMA STEEL and KRAKATAU STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, KRAKATAU STEEL 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 KRAKATAU STEEL will offset losses from the drop in KRAKATAU STEEL's long position.| ALGOMA STEEL vs. SLR Investment Corp | ALGOMA STEEL vs. Japan Asia Investment | ALGOMA STEEL vs. GUILD ESPORTS PLC | ALGOMA STEEL vs. Diversified Healthcare Trust |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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