Correlation Between Algoma Steel and Chibougamau Independent
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Chibougamau Independent 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 Chibougamau Independent 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 Chibougamau Independent Mines, you can compare the effects of market volatilities on Algoma Steel and Chibougamau Independent 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 Chibougamau Independent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Chibougamau Independent.
Diversification Opportunities for Algoma Steel and Chibougamau Independent
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algoma and Chibougamau is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Chibougamau Independent Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chibougamau Independent 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 Chibougamau Independent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chibougamau Independent has no effect on the direction of Algoma Steel i.e., Algoma Steel and Chibougamau Independent go up and down completely randomly.
Pair Corralation between Algoma Steel and Chibougamau Independent
Given the investment horizon of 90 days Algoma Steel is expected to generate 1.15 times less return on investment than Chibougamau Independent. But when comparing it to its historical volatility, Algoma Steel Group is 1.91 times less risky than Chibougamau Independent. It trades about 0.06 of its potential returns per unit of risk. Chibougamau Independent Mines is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Chibougamau Independent Mines on September 4, 2024 and sell it today you would earn a total of 2.00 from holding Chibougamau Independent Mines or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Algoma Steel Group vs. Chibougamau Independent Mines
Performance |
| Timeline |
| Algoma Steel Group |
| Chibougamau Independent |
Algoma Steel and Chibougamau Independent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Chibougamau Independent
The main advantage of trading using opposite Algoma Steel and Chibougamau Independent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Chibougamau Independent 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 Chibougamau Independent will offset losses from the drop in Chibougamau Independent's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Reliance Steel Aluminum | Algoma Steel vs. Universal Stainless Alloy |
| Chibougamau Independent vs. iShares Canadian HYBrid | Chibougamau Independent vs. Altagas Cum Red | Chibougamau Independent vs. European Residential Real | Chibougamau Independent vs. RBC Discount Bond |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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