Correlation Between ALGOMA STEEL and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on ALGOMA STEEL and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Thyssenkrupp.
Diversification Opportunities for ALGOMA STEEL and Thyssenkrupp
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ALGOMA and Thyssenkrupp is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Thyssenkrupp go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Thyssenkrupp
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, ALGOMA STEEL GROUP is 1.32 times less risky than Thyssenkrupp. The stock trades about -0.32 of its potential returns per unit of risk. The thyssenkrupp AG is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 440.00 in thyssenkrupp AG on October 13, 2024 and sell it today you would lose (40.00) from holding thyssenkrupp AG or give up 9.09% 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. thyssenkrupp AG
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| thyssenkrupp AG |
ALGOMA STEEL and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Thyssenkrupp
The main advantage of trading using opposite ALGOMA STEEL and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| ALGOMA STEEL vs. Texas Roadhouse | ALGOMA STEEL vs. Information Services International Dentsu | ALGOMA STEEL vs. Broadcom | ALGOMA STEEL vs. BROADWIND ENRGY |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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