Correlation Between Algoma Steel and Pure Energy
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Pure Energy 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 Pure Energy 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 Pure Energy Minerals, you can compare the effects of market volatilities on Algoma Steel and Pure Energy 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 Pure Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Pure Energy.
Diversification Opportunities for Algoma Steel and Pure Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Algoma and Pure is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Pure Energy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Energy Minerals 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 Pure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Energy Minerals has no effect on the direction of Algoma Steel i.e., Algoma Steel and Pure Energy go up and down completely randomly.
Pair Corralation between Algoma Steel and Pure Energy
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.38 times more return on investment than Pure Energy. However, Algoma Steel Group is 2.62 times less risky than Pure Energy. It trades about 0.11 of its potential returns per unit of risk. Pure Energy Minerals is currently generating about 0.02 per unit of risk. If you would invest 763.00 in Algoma Steel Group on September 3, 2024 and sell it today you would earn a total of 314.00 from holding Algoma Steel Group or generate 41.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Pure Energy Minerals
Performance |
| Timeline |
| Algoma Steel Group |
| Pure Energy Minerals |
Algoma Steel and Pure Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Pure Energy
The main advantage of trading using opposite Algoma Steel and Pure Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Pure Energy 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 Pure Energy will offset losses from the drop in Pure Energy's long position.| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Pure Energy vs. Algoma Steel Group | Pure Energy vs. Champion Iron | Pure Energy vs. International Zeolite Corp | Pure Energy vs. European Residential Real |
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 CEOs Directory module to screen CEOs from public companies around the world.
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