Correlation Between Algoma Steel and Air Products
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Air Products 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 Air Products 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 Air Products and, you can compare the effects of market volatilities on Algoma Steel and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Air Products.
Diversification Opportunities for Algoma Steel and Air Products
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algoma and Air is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Algoma Steel i.e., Algoma Steel and Air Products go up and down completely randomly.
Pair Corralation between Algoma Steel and Air Products
Given the investment horizon of 90 days Algoma Steel is expected to generate 7.68 times less return on investment than Air Products. In addition to that, Algoma Steel is 1.46 times more volatile than Air Products and. It trades about 0.01 of its total potential returns per unit of risk. Air Products and is currently generating about 0.09 per unit of volatility. If you would invest 28,715 in Air Products and on September 14, 2024 and sell it today you would earn a total of 2,374 from holding Air Products and or generate 8.27% 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. Air Products and
Performance |
| Timeline |
| Algoma Steel Group |
| Air Products |
Algoma Steel and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Air Products
The main advantage of trading using opposite Algoma Steel and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Algoma Steel vs. Olympic Steel | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. Commercial Metals | Algoma Steel vs. Nucor Corp |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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