Correlation Between Algoma Steel and Forum Energy
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Forum Energy 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 Forum Energy 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 Forum Energy Metals, you can compare the effects of market volatilities on Algoma Steel and Forum Energy 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 Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Forum Energy.
Diversification Opportunities for Algoma Steel and Forum Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algoma and Forum is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals 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 Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of Algoma Steel i.e., Algoma Steel and Forum Energy go up and down completely randomly.
Pair Corralation between Algoma Steel and Forum Energy
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.43 times more return on investment than Forum Energy. However, Algoma Steel Group is 2.33 times less risky than Forum Energy. It trades about 0.06 of its potential returns per unit of risk. Forum Energy Metals is currently generating about 0.01 per unit of risk. If you would invest 573.00 in Algoma Steel Group on September 3, 2024 and sell it today you would earn a total of 504.00 from holding Algoma Steel Group or generate 87.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Forum Energy Metals
Performance |
| Timeline |
| Algoma Steel Group |
| Forum Energy Metals |
Algoma Steel and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Forum Energy
The main advantage of trading using opposite Algoma Steel and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Forum Energy vs. Algoma Steel Group | Forum Energy vs. Champion Iron | Forum Energy vs. International Zeolite Corp | Forum Energy vs. European Residential Real |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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