Correlation Between Algoma Steel and Lion One
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Algoma Steel and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Lion One.
Diversification Opportunities for Algoma Steel and Lion One
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algoma and Lion is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Algoma Steel i.e., Algoma Steel and Lion One go up and down completely randomly.
Pair Corralation between Algoma Steel and Lion One
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.62 times more return on investment than Lion One. However, Algoma Steel Group is 1.62 times less risky than Lion One. It trades about 0.05 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest 601.00 in Algoma Steel Group on September 14, 2024 and sell it today you would earn a total of 396.50 from holding Algoma Steel Group or generate 65.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Algoma Steel Group vs. Lion One Metals
Performance |
| Timeline |
| Algoma Steel Group |
| Lion One Metals |
Algoma Steel and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Lion One
The main advantage of trading using opposite Algoma Steel and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Algoma Steel vs. Olympic Steel | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. Commercial Metals | Algoma Steel vs. Nucor Corp |
| Lion One vs. Advantage Solutions | Lion One vs. Atlas Corp | Lion One vs. PureCycle Technologies | Lion One vs. WM Technology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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