Correlation Between Algoma Steel and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and GoGold Resources 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 GoGold Resources 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 GoGold Resources, you can compare the effects of market volatilities on Algoma Steel and GoGold Resources 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 GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and GoGold Resources.
Diversification Opportunities for Algoma Steel and GoGold Resources
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algoma and GoGold is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold 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 GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Algoma Steel i.e., Algoma Steel and GoGold Resources go up and down completely randomly.
Pair Corralation between Algoma Steel and GoGold Resources
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.73 times more return on investment than GoGold Resources. However, Algoma Steel Group is 1.37 times less risky than GoGold Resources. It trades about 0.13 of its potential returns per unit of risk. GoGold Resources is currently generating about -0.02 per unit of risk. If you would invest 733.00 in Algoma Steel Group on September 3, 2024 and sell it today you would earn a total of 344.00 from holding Algoma Steel Group or generate 46.93% 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. GoGold Resources
Performance |
| Timeline |
| Algoma Steel Group |
| GoGold Resources |
Algoma Steel and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and GoGold Resources
The main advantage of trading using opposite Algoma Steel and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| GoGold Resources vs. Algoma Steel Group | GoGold Resources vs. Champion Iron | GoGold Resources vs. International Zeolite Corp | GoGold Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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