Correlation Between Algoma Steel and A W
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and A W 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 A W 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 A W FOOD, you can compare the effects of market volatilities on Algoma Steel and A W 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 A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and A W.
Diversification Opportunities for Algoma Steel and A W
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algoma and A W is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD 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 A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Algoma Steel i.e., Algoma Steel and A W go up and down completely randomly.
Pair Corralation between Algoma Steel and A W
Assuming the 90 days trading horizon Algoma Steel Group is expected to generate 1.45 times more return on investment than A W. However, Algoma Steel is 1.45 times more volatile than A W FOOD. It trades about 0.12 of its potential returns per unit of risk. A W FOOD is currently generating about -0.14 per unit of risk. If you would invest 1,038 in Algoma Steel Group on September 1, 2024 and sell it today you would earn a total of 464.00 from holding Algoma Steel Group or generate 44.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 24.6% |
| Values | Daily Returns |
Algoma Steel Group vs. A W FOOD
Performance |
| Timeline |
| Algoma Steel Group |
| A W FOOD |
Algoma Steel and A W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and A W
The main advantage of trading using opposite Algoma Steel and A W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, A W 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 A W will offset losses from the drop in A W's long position.| Algoma Steel vs. First Majestic Silver | Algoma Steel vs. Ivanhoe Energy | Algoma Steel vs. Orezone Gold Corp | Algoma Steel vs. Faraday Copper Corp |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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