Correlation Between ALGOMA STEEL and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on ALGOMA STEEL and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and IMPERIAL TOBACCO.
Diversification Opportunities for ALGOMA STEEL and IMPERIAL TOBACCO
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALGOMA and IMPERIAL is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and IMPERIAL TOBACCO
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the IMPERIAL TOBACCO. In addition to that, ALGOMA STEEL is 1.7 times more volatile than IMPERIAL TOBACCO . It trades about -0.54 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.15 per unit of volatility. If you would invest 2,998 in IMPERIAL TOBACCO on September 24, 2024 and sell it today you would earn a total of 83.00 from holding IMPERIAL TOBACCO or generate 2.77% 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. IMPERIAL TOBACCO
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| IMPERIAL TOBACCO |
ALGOMA STEEL and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and IMPERIAL TOBACCO
The main advantage of trading using opposite ALGOMA STEEL and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| ALGOMA STEEL vs. Nucor | ALGOMA STEEL vs. ArcelorMittal SA | ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. Steel Dynamics |
| IMPERIAL TOBACCO vs. Tianjin Capital Environmental | IMPERIAL TOBACCO vs. CarsalesCom | IMPERIAL TOBACCO vs. Khiron Life Sciences | IMPERIAL TOBACCO vs. ALGOMA STEEL GROUP |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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