Correlation Between Algoma Steel and Jade Leader
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Jade Leader 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 Jade Leader 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 Jade Leader Corp, you can compare the effects of market volatilities on Algoma Steel and Jade Leader 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 Jade Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Jade Leader.
Diversification Opportunities for Algoma Steel and Jade Leader
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and Jade is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Jade Leader Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Leader Corp 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 Jade Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Leader Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Jade Leader go up and down completely randomly.
Pair Corralation between Algoma Steel and Jade Leader
Given the investment horizon of 90 days Algoma Steel is expected to generate 2.48 times less return on investment than Jade Leader. But when comparing it to its historical volatility, Algoma Steel Group is 4.68 times less risky than Jade Leader. It trades about 0.06 of its potential returns per unit of risk. Jade Leader Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Jade Leader Corp on September 12, 2024 and sell it today you would lose (2.50) from holding Jade Leader Corp or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Algoma Steel Group vs. Jade Leader Corp
Performance |
| Timeline |
| Algoma Steel Group |
| Jade Leader Corp |
Algoma Steel and Jade Leader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Jade Leader
The main advantage of trading using opposite Algoma Steel and Jade Leader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Jade Leader 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 Jade Leader will offset losses from the drop in Jade Leader's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Jade Leader vs. Ressources Minieres Radisson | Jade Leader vs. Galantas Gold Corp | Jade Leader vs. Red Pine Exploration | Jade Leader vs. Kore Mining |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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