Correlation Between ALGOMA STEEL and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Zijin Mining 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 Zijin Mining 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 Zijin Mining Group, you can compare the effects of market volatilities on ALGOMA STEEL and Zijin Mining 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 Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Zijin Mining.
Diversification Opportunities for ALGOMA STEEL and Zijin Mining
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALGOMA and Zijin is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group 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 Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Zijin Mining go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Zijin Mining
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 0.77 times more return on investment than Zijin Mining. However, ALGOMA STEEL GROUP is 1.3 times less risky than Zijin Mining. It trades about 0.07 of its potential returns per unit of risk. Zijin Mining Group is currently generating about -0.05 per unit of risk. If you would invest 965.00 in ALGOMA STEEL GROUP on September 1, 2024 and sell it today you would earn a total of 35.00 from holding ALGOMA STEEL GROUP or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Zijin Mining Group
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Zijin Mining Group |
ALGOMA STEEL and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Zijin Mining
The main advantage of trading using opposite ALGOMA STEEL and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Zijin Mining 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 Zijin Mining will offset losses from the drop in Zijin Mining's long position.| ALGOMA STEEL vs. ScanSource | ALGOMA STEEL vs. Tower Semiconductor | ALGOMA STEEL vs. LION ONE METALS | ALGOMA STEEL vs. PRECISION DRILLING P |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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