Correlation Between ALGOMA STEEL and Microsoft
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on ALGOMA STEEL and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Microsoft.
Diversification Opportunities for ALGOMA STEEL and Microsoft
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALGOMA and Microsoft is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Microsoft go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Microsoft
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the Microsoft. In addition to that, ALGOMA STEEL is 3.19 times more volatile than Microsoft. It trades about -0.18 of its total potential returns per unit of risk. Microsoft is currently generating about -0.16 per unit of volatility. If you would invest 42,255 in Microsoft on October 10, 2024 and sell it today you would lose (1,130) from holding Microsoft or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Microsoft
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Microsoft |
ALGOMA STEEL and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Microsoft
The main advantage of trading using opposite ALGOMA STEEL and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| ALGOMA STEEL vs. Diamyd Medical AB | ALGOMA STEEL vs. SINGAPORE AIRLINES | ALGOMA STEEL vs. PEPTONIC MEDICAL | ALGOMA STEEL vs. CVR Medical Corp |
| Microsoft vs. Nanjing Panda Electronics | Microsoft vs. AEGEAN AIRLINES | Microsoft vs. Nok Airlines PCL | Microsoft vs. Gol Intelligent Airlines |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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