Correlation Between Algoma Steel and Asiabasemetals
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Asiabasemetals 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 Asiabasemetals 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 Asiabasemetals, you can compare the effects of market volatilities on Algoma Steel and Asiabasemetals 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 Asiabasemetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Asiabasemetals.
Diversification Opportunities for Algoma Steel and Asiabasemetals
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algoma and Asiabasemetals is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Asiabasemetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabasemetals 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 Asiabasemetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabasemetals has no effect on the direction of Algoma Steel i.e., Algoma Steel and Asiabasemetals go up and down completely randomly.
Pair Corralation between Algoma Steel and Asiabasemetals
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.36 times more return on investment than Asiabasemetals. However, Algoma Steel Group is 2.78 times less risky than Asiabasemetals. It trades about 0.06 of its potential returns per unit of risk. Asiabasemetals is currently generating about 0.01 per unit of risk. If you would invest 795.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 267.00 from holding Algoma Steel Group or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Asiabasemetals
Performance |
| Timeline |
| Algoma Steel Group |
| Asiabasemetals |
Algoma Steel and Asiabasemetals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Asiabasemetals
The main advantage of trading using opposite Algoma Steel and Asiabasemetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Asiabasemetals 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 Asiabasemetals will offset losses from the drop in Asiabasemetals' long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Reliance Steel Aluminum | Algoma Steel vs. Universal Stainless Alloy |
| Asiabasemetals vs. First Majestic Silver | Asiabasemetals vs. Ivanhoe Energy | Asiabasemetals vs. Orezone Gold Corp | Asiabasemetals vs. Faraday Copper 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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