Correlation Between Algoma Steel and Acerinox
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Acerinox 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 Acerinox 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 Acerinox SA ADR, you can compare the effects of market volatilities on Algoma Steel and Acerinox 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 Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Acerinox.
Diversification Opportunities for Algoma Steel and Acerinox
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and Acerinox is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Acerinox SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox SA ADR 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 Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox SA ADR has no effect on the direction of Algoma Steel i.e., Algoma Steel and Acerinox go up and down completely randomly.
Pair Corralation between Algoma Steel and Acerinox
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.94 times more return on investment than Acerinox. However, Algoma Steel Group is 1.07 times less risky than Acerinox. It trades about 0.09 of its potential returns per unit of risk. Acerinox SA ADR is currently generating about 0.03 per unit of risk. If you would invest 1,055 in Algoma Steel Group on August 28, 2024 and sell it today you would earn a total of 52.00 from holding Algoma Steel Group or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Acerinox SA ADR
Performance |
| Timeline |
| Algoma Steel Group |
| Acerinox SA ADR |
Algoma Steel and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Acerinox
The main advantage of trading using opposite Algoma Steel and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox'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 |
| Acerinox vs. Algoma Steel Group | Acerinox vs. Synalloy | Acerinox vs. Algoma Steel Group | Acerinox 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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