Correlation Between Algoma Steel and EcoGraf
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and EcoGraf 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 EcoGraf 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 EcoGraf Limited, you can compare the effects of market volatilities on Algoma Steel and EcoGraf 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 EcoGraf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and EcoGraf.
Diversification Opportunities for Algoma Steel and EcoGraf
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algoma and EcoGraf is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and EcoGraf Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoGraf Limited 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 EcoGraf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoGraf Limited has no effect on the direction of Algoma Steel i.e., Algoma Steel and EcoGraf go up and down completely randomly.
Pair Corralation between Algoma Steel and EcoGraf
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.51 times more return on investment than EcoGraf. However, Algoma Steel Group is 1.97 times less risky than EcoGraf. It trades about 0.06 of its potential returns per unit of risk. EcoGraf Limited is currently generating about -0.06 per unit of risk. If you would invest 565.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 491.00 from holding Algoma Steel Group or generate 86.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. EcoGraf Limited
Performance |
| Timeline |
| Algoma Steel Group |
| EcoGraf Limited |
Algoma Steel and EcoGraf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and EcoGraf
The main advantage of trading using opposite Algoma Steel and EcoGraf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, EcoGraf 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 EcoGraf will offset losses from the drop in EcoGraf'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 |
| EcoGraf vs. National Beverage Corp | EcoGraf vs. Compania Cervecerias Unidas | EcoGraf vs. The Coca Cola | EcoGraf vs. Diageo PLC ADR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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