Correlation Between Algoma Steel and Abacus Life
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Abacus Life 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 Abacus Life 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 Abacus Life, you can compare the effects of market volatilities on Algoma Steel and Abacus Life 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 Abacus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Abacus Life.
Diversification Opportunities for Algoma Steel and Abacus Life
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algoma and Abacus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life 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 Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of Algoma Steel i.e., Algoma Steel and Abacus Life go up and down completely randomly.
Pair Corralation between Algoma Steel and Abacus Life
Given the investment horizon of 90 days Algoma Steel is expected to generate 69.42 times less return on investment than Abacus Life. But when comparing it to its historical volatility, Algoma Steel Group is 3.24 times less risky than Abacus Life. It trades about 0.0 of its potential returns per unit of risk. Abacus Life is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Abacus Life on December 6, 2024 and sell it today you would earn a total of 122.00 from holding Abacus Life or generate 435.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.82% |
| Values | Daily Returns |
Algoma Steel Group vs. Abacus Life
Performance |
| Timeline |
| Algoma Steel Group |
| Abacus Life |
Algoma Steel and Abacus Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Abacus Life
The main advantage of trading using opposite Algoma Steel and Abacus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Abacus Life 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 Abacus Life will offset losses from the drop in Abacus Life's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Abacus Life vs. Weibo Corp | Abacus Life vs. Life Insurance | Abacus Life vs. BK Technologies | Abacus Life vs. KVH Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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