Correlation Between Algoma Steel and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Algoma Steel 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 Algoma Steel 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 Algoma Steel Group, you can compare the effects of market volatilities on Algoma Steel and Algoma Steel 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 Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Algoma Steel.
Diversification Opportunities for Algoma Steel and Algoma Steel
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Algoma and Algoma is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group 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 Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Algoma Steel i.e., Algoma Steel and Algoma Steel go up and down completely randomly.
Pair Corralation between Algoma Steel and Algoma Steel
Given the investment horizon of 90 days Algoma Steel is expected to generate 1.64 times less return on investment than Algoma Steel. In addition to that, Algoma Steel is 1.02 times more volatile than Algoma Steel Group. It trades about 0.05 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.08 per unit of volatility. If you would invest 1,386 in Algoma Steel Group on August 30, 2024 and sell it today you would earn a total of 109.00 from holding Algoma Steel Group or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Algoma Steel Group vs. Algoma Steel Group
Performance |
| Timeline |
| Algoma Steel Group |
| Algoma Steel Group |
Algoma Steel and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Algoma Steel
The main advantage of trading using opposite Algoma Steel and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Algoma Steel vs. Paramount Gold Nevada | Algoma Steel vs. Liberty Gold Corp | Algoma Steel vs. International Tower Hill | Algoma Steel vs. Allegiant Gold |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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