Correlation Between Algoma Steel and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and LithiumBank 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 LithiumBank 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 LithiumBank Resources Corp, you can compare the effects of market volatilities on Algoma Steel and LithiumBank 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 LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and LithiumBank Resources.
Diversification Opportunities for Algoma Steel and LithiumBank Resources
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and LithiumBank is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Algoma Steel i.e., Algoma Steel and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Algoma Steel and LithiumBank Resources
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.56 times more return on investment than LithiumBank Resources. However, Algoma Steel Group is 1.79 times less risky than LithiumBank Resources. It trades about 0.06 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.08 per unit of risk. If you would invest 692.00 in Algoma Steel Group on September 12, 2024 and sell it today you would earn a total of 323.00 from holding Algoma Steel Group or generate 46.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Algoma Steel Group vs. LithiumBank Resources Corp
Performance |
| Timeline |
| Algoma Steel Group |
| LithiumBank Resources |
Algoma Steel and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and LithiumBank Resources
The main advantage of trading using opposite Algoma Steel and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, LithiumBank 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| LithiumBank Resources vs. Ressources Minieres Radisson | LithiumBank Resources vs. Galantas Gold Corp | LithiumBank Resources vs. Red Pine Exploration | LithiumBank Resources 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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