Correlation Between Algoma Steel and Copper Road
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Copper Road 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 Copper Road 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 Copper Road Resources, you can compare the effects of market volatilities on Algoma Steel and Copper Road 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 Copper Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Copper Road.
Diversification Opportunities for Algoma Steel and Copper Road
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algoma and Copper is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Copper Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Road Resources 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 Copper Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Road Resources has no effect on the direction of Algoma Steel i.e., Algoma Steel and Copper Road go up and down completely randomly.
Pair Corralation between Algoma Steel and Copper Road
Given the investment horizon of 90 days Algoma Steel is expected to generate 3.09 times less return on investment than Copper Road. But when comparing it to its historical volatility, Algoma Steel Group is 8.21 times less risky than Copper Road. It trades about 0.12 of its potential returns per unit of risk. Copper Road Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Copper Road Resources on September 12, 2024 and sell it today you would lose (1.00) from holding Copper Road Resources or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Copper Road Resources
Performance |
| Timeline |
| Algoma Steel Group |
| Copper Road Resources |
Algoma Steel and Copper Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Copper Road
The main advantage of trading using opposite Algoma Steel and Copper Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Copper Road 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 Copper Road will offset losses from the drop in Copper Road's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Copper Road vs. Ressources Minieres Radisson | Copper Road vs. Galantas Gold Corp | Copper Road vs. Red Pine Exploration | Copper Road vs. Kore Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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