Correlation Between Algoma Steel and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and GEN Restaurant 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 GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on Algoma Steel and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and GEN Restaurant.
Diversification Opportunities for Algoma Steel and GEN Restaurant
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algoma and GEN is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Algoma Steel i.e., Algoma Steel and GEN Restaurant go up and down completely randomly.
Pair Corralation between Algoma Steel and GEN Restaurant
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.54 times more return on investment than GEN Restaurant. However, Algoma Steel Group is 1.84 times less risky than GEN Restaurant. It trades about 0.08 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.01 per unit of risk. If you would invest 1,037 in Algoma Steel Group on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Algoma Steel Group or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. GEN Restaurant Group,
Performance |
| Timeline |
| Algoma Steel Group |
| GEN Restaurant Group, |
Algoma Steel and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and GEN Restaurant
The main advantage of trading using opposite Algoma Steel and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| GEN Restaurant vs. SL Green Realty | GEN Restaurant vs. Haverty Furniture Companies | GEN Restaurant vs. FiscalNote Holdings | GEN Restaurant vs. Cadence Design Systems |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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