Correlation Between Algoma Steel and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Axalta Coating 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 Axalta Coating 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 Axalta Coating Systems, you can compare the effects of market volatilities on Algoma Steel and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Axalta Coating.
Diversification Opportunities for Algoma Steel and Axalta Coating
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algoma and Axalta is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Algoma Steel i.e., Algoma Steel and Axalta Coating go up and down completely randomly.
Pair Corralation between Algoma Steel and Axalta Coating
Given the investment horizon of 90 days Algoma Steel is expected to generate 1.37 times less return on investment than Axalta Coating. In addition to that, Algoma Steel is 1.98 times more volatile than Axalta Coating Systems. It trades about 0.08 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.22 per unit of volatility. If you would invest 3,808 in Axalta Coating Systems on September 3, 2024 and sell it today you would earn a total of 238.00 from holding Axalta Coating Systems or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Axalta Coating Systems
Performance |
| Timeline |
| Algoma Steel Group |
| Axalta Coating Systems |
Algoma Steel and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Axalta Coating
The main advantage of trading using opposite Algoma Steel and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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