Correlation Between ALGOMA STEEL and Metro AG
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on ALGOMA STEEL and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Metro AG.
Diversification Opportunities for ALGOMA STEEL and Metro AG
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ALGOMA and Metro is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Metro AG go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Metro AG
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the Metro AG. In addition to that, ALGOMA STEEL is 1.19 times more volatile than Metro AG. It trades about -0.24 of its total potential returns per unit of risk. Metro AG is currently generating about -0.28 per unit of volatility. If you would invest 443.00 in Metro AG on September 12, 2024 and sell it today you would lose (43.00) from holding Metro AG or give up 9.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Metro AG
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Metro AG |
ALGOMA STEEL and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Metro AG
The main advantage of trading using opposite ALGOMA STEEL and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. NIPPON STEEL SPADR | ALGOMA STEEL vs. Reliance Steel Aluminum | ALGOMA STEEL vs. Superior Plus Corp |
| Metro AG vs. ALGOMA STEEL GROUP | Metro AG vs. HF SINCLAIR P | Metro AG vs. GFL ENVIRONM | Metro AG vs. COSMOSTEEL HLDGS |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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