Correlation Between ALGOMA STEEL and CECO ENVIRONMENTAL
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL, you can compare the effects of market volatilities on ALGOMA STEEL and CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and CECO ENVIRONMENTAL.
Diversification Opportunities for ALGOMA STEEL and CECO ENVIRONMENTAL
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between ALGOMA and CECO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO ENVIRONMENTAL has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and CECO ENVIRONMENTAL go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and CECO ENVIRONMENTAL
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 0.55 times more return on investment than CECO ENVIRONMENTAL. However, ALGOMA STEEL GROUP is 1.83 times less risky than CECO ENVIRONMENTAL. It trades about 0.28 of its potential returns per unit of risk. CECO ENVIRONMENTAL is currently generating about 0.14 per unit of risk. If you would invest 885.00 in ALGOMA STEEL GROUP on August 24, 2024 and sell it today you would earn a total of 175.00 from holding ALGOMA STEEL GROUP or generate 19.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. CECO ENVIRONMENTAL
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| CECO ENVIRONMENTAL |
ALGOMA STEEL and CECO ENVIRONMENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and CECO ENVIRONMENTAL
The main advantage of trading using opposite ALGOMA STEEL and CECO ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL will offset losses from the drop in CECO ENVIRONMENTAL's long position.| ALGOMA STEEL vs. QIIWI GAMES AB | ALGOMA STEEL vs. COPLAND ROAD CAPITAL | ALGOMA STEEL vs. QUEEN S ROAD | ALGOMA STEEL vs. Scientific Games |
| CECO ENVIRONMENTAL vs. SIDETRADE EO 1 | CECO ENVIRONMENTAL vs. Auto Trader Group | CECO ENVIRONMENTAL vs. AUTO TRADER ADR | CECO ENVIRONMENTAL vs. MEDICAL FACILITIES NEW |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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