Correlation Between Synalloy and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Synalloy and Algoma 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 Synalloy and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synalloy and Algoma Steel Group, you can compare the effects of market volatilities on Synalloy and Algoma 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 Synalloy with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synalloy and Algoma Steel.
Diversification Opportunities for Synalloy and Algoma Steel
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Synalloy and Algoma is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Synalloy and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Synalloy 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 Synalloy are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Synalloy i.e., Synalloy and Algoma Steel go up and down completely randomly.
Pair Corralation between Synalloy and Algoma Steel
Given the investment horizon of 90 days Synalloy is expected to generate 0.29 times more return on investment than Algoma Steel. However, Synalloy is 3.43 times less risky than Algoma Steel. It trades about 0.16 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.06 per unit of risk. If you would invest 940.00 in Synalloy on November 1, 2024 and sell it today you would earn a total of 174.00 from holding Synalloy or generate 18.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synalloy vs. Algoma Steel Group
Performance |
| Timeline |
| Synalloy |
| Algoma Steel Group |
Synalloy and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synalloy and Algoma Steel
The main advantage of trading using opposite Synalloy and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synalloy position performs unexpectedly, Algoma 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Synalloy vs. Grupo Simec SAB | Synalloy vs. Mesabi Trust | Synalloy vs. Algoma Steel Group | Synalloy vs. Aperam PK |
| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Evolv Technologies Holdings | Algoma Steel vs. Valens Semiconductor |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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