Correlation Between Algoma Steel and Synalloy
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Synalloy 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 Synalloy 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 Synalloy, you can compare the effects of market volatilities on Algoma Steel and Synalloy 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 Synalloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Synalloy.
Diversification Opportunities for Algoma Steel and Synalloy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Algoma and Synalloy is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Synalloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synalloy 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 Synalloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synalloy has no effect on the direction of Algoma Steel i.e., Algoma Steel and Synalloy go up and down completely randomly.
Pair Corralation between Algoma Steel and Synalloy
Given the investment horizon of 90 days Algoma Steel is expected to generate 2.12 times less return on investment than Synalloy. In addition to that, Algoma Steel is 1.93 times more volatile than Synalloy. It trades about 0.09 of its total potential returns per unit of risk. Synalloy is currently generating about 0.39 per unit of volatility. If you would invest 948.00 in Synalloy on August 28, 2024 and sell it today you would earn a total of 117.00 from holding Synalloy or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Synalloy
Performance |
| Timeline |
| Algoma Steel Group |
| Synalloy |
Algoma Steel and Synalloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Synalloy
The main advantage of trading using opposite Algoma Steel and Synalloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Synalloy 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 Synalloy will offset losses from the drop in Synalloy's long position.| Algoma Steel vs. Labrador Gold Corp | Algoma Steel vs. Aurion Resources | Algoma Steel vs. Puma Exploration | Algoma Steel vs. Golden Star Resource |
| Synalloy vs. Grupo Simec SAB | Synalloy vs. Mesabi Trust | Synalloy vs. Algoma Steel Group | Synalloy vs. Aperam PK |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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