Correlation Between ALGOMA STEEL and PT Steel
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and PT Steel 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 PT Steel 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 PT Steel Pipe, you can compare the effects of market volatilities on ALGOMA STEEL and PT Steel 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 PT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and PT Steel.
Diversification Opportunities for ALGOMA STEEL and PT Steel
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ALGOMA and S08 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and PT Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Steel Pipe 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 PT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Steel Pipe has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and PT Steel go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and PT Steel
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 0.6 times more return on investment than PT Steel. However, ALGOMA STEEL GROUP is 1.67 times less risky than PT Steel. It trades about 0.02 of its potential returns per unit of risk. PT Steel Pipe is currently generating about 0.01 per unit of risk. If you would invest 782.00 in ALGOMA STEEL GROUP on October 25, 2024 and sell it today you would earn a total of 23.00 from holding ALGOMA STEEL GROUP or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. PT Steel Pipe
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| PT Steel Pipe |
ALGOMA STEEL and PT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and PT Steel
The main advantage of trading using opposite ALGOMA STEEL and PT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, PT Steel 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 PT Steel will offset losses from the drop in PT Steel's long position.| ALGOMA STEEL vs. GAMESTOP | ALGOMA STEEL vs. PennantPark Investment | ALGOMA STEEL vs. AOYAMA TRADING | ALGOMA STEEL vs. Keck Seng Investments |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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