Correlation Between Algoma Steel and Noram Lithium
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Noram Lithium 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 Noram Lithium 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 Noram Lithium Corp, you can compare the effects of market volatilities on Algoma Steel and Noram Lithium 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 Noram Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Noram Lithium.
Diversification Opportunities for Algoma Steel and Noram Lithium
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and Noram is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Noram Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noram Lithium 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 Noram Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noram Lithium Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Noram Lithium go up and down completely randomly.
Pair Corralation between Algoma Steel and Noram Lithium
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.4 times more return on investment than Noram Lithium. However, Algoma Steel Group is 2.49 times less risky than Noram Lithium. It trades about 0.05 of its potential returns per unit of risk. Noram Lithium Corp is currently generating about -0.04 per unit of risk. If you would invest 743.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 313.00 from holding Algoma Steel Group or generate 42.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Noram Lithium Corp
Performance |
| Timeline |
| Algoma Steel Group |
| Noram Lithium Corp |
Algoma Steel and Noram Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Noram Lithium
The main advantage of trading using opposite Algoma Steel and Noram Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Noram Lithium 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 Noram Lithium will offset losses from the drop in Noram Lithium's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Reliance Steel Aluminum | Algoma Steel vs. Universal Stainless Alloy |
| Noram Lithium vs. Iconic Minerals | Noram Lithium vs. Imagine Lithium | Noram Lithium vs. Grid Metals Corp | Noram Lithium vs. New Age Metals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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