Correlation Between Air Products and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Algoma Steel Group, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Algoma Steel.
Diversification Opportunities for Air Products and Algoma Steel
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Algoma is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and 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 Air Products 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 Air Products and 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 Air Products i.e., Air Products and Algoma Steel go up and down completely randomly.
Pair Corralation between Air Products and Algoma Steel
Considering the 90-day investment horizon Air Products is expected to generate 5.84 times less return on investment than Algoma Steel. But when comparing it to its historical volatility, Air Products and is 1.45 times less risky than Algoma Steel. It trades about 0.01 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 601.00 in Algoma Steel Group on September 14, 2024 and sell it today you would earn a total of 396.50 from holding Algoma Steel Group or generate 65.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Algoma Steel Group
Performance |
| Timeline |
| Air Products |
| Algoma Steel Group |
Air Products and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Algoma Steel
The main advantage of trading using opposite Air Products and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| Algoma Steel vs. Olympic Steel | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. Commercial Metals | Algoma Steel vs. Nucor Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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