Correlation Between ALGOMA STEEL and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE, you can compare the effects of market volatilities on ALGOMA STEEL and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and GEELY AUTOMOBILE.
Diversification Opportunities for ALGOMA STEEL and GEELY AUTOMOBILE
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALGOMA and GEELY is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and GEELY AUTOMOBILE
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the GEELY AUTOMOBILE. But the stock apears to be less risky and, when comparing its historical volatility, ALGOMA STEEL GROUP is 2.0 times less risky than GEELY AUTOMOBILE. The stock trades about -0.26 of its potential returns per unit of risk. The GEELY AUTOMOBILE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 170.00 in GEELY AUTOMOBILE on September 15, 2024 and sell it today you would earn a total of 19.00 from holding GEELY AUTOMOBILE or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| GEELY AUTOMOBILE |
ALGOMA STEEL and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and GEELY AUTOMOBILE
The main advantage of trading using opposite ALGOMA STEEL and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| ALGOMA STEEL vs. Flowers Foods | ALGOMA STEEL vs. CarsalesCom | ALGOMA STEEL vs. GEELY AUTOMOBILE | ALGOMA STEEL vs. International Consolidated Airlines |
| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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