Correlation Between Algoma Steel and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture, you can compare the effects of market volatilities on Algoma Steel and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Hooker Furniture.
Diversification Opportunities for Algoma Steel and Hooker Furniture
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algoma and Hooker is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Algoma Steel i.e., Algoma Steel and Hooker Furniture go up and down completely randomly.
Pair Corralation between Algoma Steel and Hooker Furniture
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.84 times more return on investment than Hooker Furniture. However, Algoma Steel Group is 1.19 times less risky than Hooker Furniture. It trades about 0.05 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.03 per unit of risk. If you would invest 751.00 in Algoma Steel Group on September 1, 2024 and sell it today you would earn a total of 326.00 from holding Algoma Steel Group or generate 43.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Hooker Furniture
Performance |
| Timeline |
| Algoma Steel Group |
| Hooker Furniture |
Algoma Steel and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Hooker Furniture
The main advantage of trading using opposite Algoma Steel and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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