Correlation Between Algoma Steel and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and CECO Environmental 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 CECO Environmental 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 CECO Environmental Corp, you can compare the effects of market volatilities on Algoma Steel and CECO Environmental 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 CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and CECO Environmental.
Diversification Opportunities for Algoma Steel and CECO Environmental
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Algoma and CECO is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp 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 CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and CECO Environmental go up and down completely randomly.
Pair Corralation between Algoma Steel and CECO Environmental
Given the investment horizon of 90 days Algoma Steel is expected to generate 9.63 times less return on investment than CECO Environmental. But when comparing it to its historical volatility, Algoma Steel Group is 1.72 times less risky than CECO Environmental. It trades about 0.04 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,631 in CECO Environmental Corp on August 29, 2024 and sell it today you would earn a total of 581.00 from holding CECO Environmental Corp or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. CECO Environmental Corp
Performance |
| Timeline |
| Algoma Steel Group |
| CECO Environmental Corp |
Algoma Steel and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and CECO Environmental
The main advantage of trading using opposite Algoma Steel and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, CECO Environmental 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 CECO Environmental will offset losses from the drop in CECO Environmental's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR | Algoma Steel vs. Algoma Steel Group |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |