Correlation Between ALGOMA STEEL and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM, you can compare the effects of market volatilities on ALGOMA STEEL and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and CARSALESCOM.
Diversification Opportunities for ALGOMA STEEL and CARSALESCOM
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ALGOMA and CARSALESCOM is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and CARSALESCOM go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and CARSALESCOM
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the CARSALESCOM. In addition to that, ALGOMA STEEL is 1.9 times more volatile than CARSALESCOM. It trades about -0.22 of its total potential returns per unit of risk. CARSALESCOM is currently generating about -0.02 per unit of volatility. If you would invest 2,380 in CARSALESCOM on October 11, 2024 and sell it today you would lose (20.00) from holding CARSALESCOM or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. CARSALESCOM
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| CARSALESCOM |
ALGOMA STEEL and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and CARSALESCOM
The main advantage of trading using opposite ALGOMA STEEL and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| ALGOMA STEEL vs. BANK OF CHINA | ALGOMA STEEL vs. Dairy Farm International | ALGOMA STEEL vs. Hitachi Construction Machinery | ALGOMA STEEL vs. Synchrony Financial |
| CARSALESCOM vs. Corporate Travel Management | CARSALESCOM vs. Jupiter Fund Management | CARSALESCOM vs. MeVis Medical Solutions | CARSALESCOM vs. Coor Service Management |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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