Correlation Between ALGOMA STEEL and Air New
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on ALGOMA STEEL and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Air New.
Diversification Opportunities for ALGOMA STEEL and Air New
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ALGOMA and Air is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Air New go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Air New
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 1.54 times more return on investment than Air New. However, ALGOMA STEEL is 1.54 times more volatile than Air New Zealand. It trades about 0.06 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.02 per unit of risk. If you would invest 609.00 in ALGOMA STEEL GROUP on August 24, 2024 and sell it today you would earn a total of 451.00 from holding ALGOMA STEEL GROUP or generate 74.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Air New Zealand
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Air New Zealand |
ALGOMA STEEL and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Air New
The main advantage of trading using opposite ALGOMA STEEL and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| ALGOMA STEEL vs. QIIWI GAMES AB | ALGOMA STEEL vs. COPLAND ROAD CAPITAL | ALGOMA STEEL vs. QUEEN S ROAD | ALGOMA STEEL vs. Scientific Games |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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