Correlation Between Algoma Steel and Blue Thunder
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Blue Thunder 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 Blue Thunder 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 Blue Thunder Mining, you can compare the effects of market volatilities on Algoma Steel and Blue Thunder 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 Blue Thunder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Blue Thunder.
Diversification Opportunities for Algoma Steel and Blue Thunder
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Algoma and Blue is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Blue Thunder Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Thunder Mining 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 Blue Thunder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Thunder Mining has no effect on the direction of Algoma Steel i.e., Algoma Steel and Blue Thunder go up and down completely randomly.
Pair Corralation between Algoma Steel and Blue Thunder
Given the investment horizon of 90 days Algoma Steel is expected to generate 1.26 times less return on investment than Blue Thunder. But when comparing it to its historical volatility, Algoma Steel Group is 2.95 times less risky than Blue Thunder. It trades about 0.06 of its potential returns per unit of risk. Blue Thunder Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Blue Thunder Mining on September 12, 2024 and sell it today you would lose (1.00) from holding Blue Thunder Mining or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Algoma Steel Group vs. Blue Thunder Mining
Performance |
| Timeline |
| Algoma Steel Group |
| Blue Thunder Mining |
Algoma Steel and Blue Thunder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Blue Thunder
The main advantage of trading using opposite Algoma Steel and Blue Thunder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Blue Thunder 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 Blue Thunder will offset losses from the drop in Blue Thunder's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Blue Thunder vs. MTY Food Group | Blue Thunder vs. Nicola Mining | Blue Thunder vs. NeXGold Mining Corp | Blue Thunder vs. Metalero Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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