Correlation Between ALGOMA STEEL and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines Limited, you can compare the effects of market volatilities on ALGOMA STEEL and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Singapore Airlines.
Diversification Opportunities for ALGOMA STEEL and Singapore Airlines
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ALGOMA and Singapore is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Singapore Airlines go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Singapore Airlines
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 1.76 times more return on investment than Singapore Airlines. However, ALGOMA STEEL is 1.76 times more volatile than Singapore Airlines Limited. It trades about 0.03 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.05 per unit of risk. If you would invest 635.00 in ALGOMA STEEL GROUP on October 16, 2024 and sell it today you would earn a total of 175.00 from holding ALGOMA STEEL GROUP or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Singapore Airlines Limited
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Singapore Airlines |
ALGOMA STEEL and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Singapore Airlines
The main advantage of trading using opposite ALGOMA STEEL and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| ALGOMA STEEL vs. USWE SPORTS AB | ALGOMA STEEL vs. Playmates Toys Limited | ALGOMA STEEL vs. InPlay Oil Corp | ALGOMA STEEL vs. T MOBILE INCDL 00001 |
| Singapore Airlines vs. Gaztransport Technigaz SA | Singapore Airlines vs. COLUMBIA SPORTSWEAR | Singapore Airlines vs. COREBRIDGE FINANCIAL INC | Singapore Airlines vs. Transport International Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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