Correlation Between Algoma Steel and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing, you can compare the effects of market volatilities on Algoma Steel and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and AMCON Distributing.
Diversification Opportunities for Algoma Steel and AMCON Distributing
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and AMCON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Algoma Steel i.e., Algoma Steel and AMCON Distributing go up and down completely randomly.
Pair Corralation between Algoma Steel and AMCON Distributing
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.61 times more return on investment than AMCON Distributing. However, Algoma Steel Group is 1.65 times less risky than AMCON Distributing. It trades about 0.06 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.01 per unit of risk. If you would invest 1,006 in Algoma Steel Group on September 2, 2024 and sell it today you would earn a total of 71.00 from holding Algoma Steel Group or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Algoma Steel Group vs. AMCON Distributing
Performance |
| Timeline |
| Algoma Steel Group |
| AMCON Distributing |
Algoma Steel and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and AMCON Distributing
The main advantage of trading using opposite Algoma Steel and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Wolverine World Wide |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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