Correlation Between Algoma Steel and Arizona Metals
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Arizona Metals 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 Arizona Metals 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 Arizona Metals Corp, you can compare the effects of market volatilities on Algoma Steel and Arizona Metals 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 Arizona Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Arizona Metals.
Diversification Opportunities for Algoma Steel and Arizona Metals
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algoma and Arizona is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Arizona Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Metals Corp 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 Arizona Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Metals Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Arizona Metals go up and down completely randomly.
Pair Corralation between Algoma Steel and Arizona Metals
Assuming the 90 days trading horizon Algoma Steel Group is expected to generate 0.42 times more return on investment than Arizona Metals. However, Algoma Steel Group is 2.4 times less risky than Arizona Metals. It trades about 0.05 of its potential returns per unit of risk. Arizona Metals Corp is currently generating about -0.01 per unit of risk. If you would invest 1,360 in Algoma Steel Group on September 12, 2024 and sell it today you would earn a total of 74.00 from holding Algoma Steel Group or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Algoma Steel Group vs. Arizona Metals Corp
Performance |
| Timeline |
| Algoma Steel Group |
| Arizona Metals Corp |
Algoma Steel and Arizona Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Arizona Metals
The main advantage of trading using opposite Algoma Steel and Arizona Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Arizona Metals 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 Arizona Metals will offset losses from the drop in Arizona Metals' long position.| Algoma Steel vs. Arizona Sonoran Copper | Algoma Steel vs. Marimaca Copper Corp | Algoma Steel vs. World Copper | Algoma Steel vs. QC Copper and |
| Arizona Metals vs. Foraco International SA | Arizona Metals vs. Geodrill Limited | Arizona Metals vs. Major Drilling Group | Arizona Metals vs. Bri Chem 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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