Correlation Between ALGOMA STEEL and Lendlease
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Lendlease 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 Lendlease 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 Lendlease Group, you can compare the effects of market volatilities on ALGOMA STEEL and Lendlease 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 Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Lendlease.
Diversification Opportunities for ALGOMA STEEL and Lendlease
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ALGOMA and Lendlease is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Lendlease go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Lendlease
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 1.21 times more return on investment than Lendlease. However, ALGOMA STEEL is 1.21 times more volatile than Lendlease Group. It trades about -0.02 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.03 per unit of risk. If you would invest 613.00 in ALGOMA STEEL GROUP on January 20, 2025 and sell it today you would lose (203.00) from holding ALGOMA STEEL GROUP or give up 33.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Lendlease Group
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Lendlease Group |
ALGOMA STEEL and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Lendlease
The main advantage of trading using opposite ALGOMA STEEL and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease's long position.| ALGOMA STEEL vs. Nucor | ALGOMA STEEL vs. ArcelorMittal SA | ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. Steel Dynamics |
| Lendlease vs. Retail Estates NV | Lendlease vs. JIAHUA STORES | Lendlease vs. FAST RETAIL ADR | Lendlease vs. Costco Wholesale Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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