Correlation Between Algoma Steel and Transurban
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Transurban 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 Transurban 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 Transurban Group, you can compare the effects of market volatilities on Algoma Steel and Transurban 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 Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Transurban.
Diversification Opportunities for Algoma Steel and Transurban
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algoma and Transurban is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Algoma Steel i.e., Algoma Steel and Transurban go up and down completely randomly.
Pair Corralation between Algoma Steel and Transurban
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 0.76 times more return on investment than Transurban. However, Algoma Steel Group is 1.31 times less risky than Transurban. It trades about 0.06 of its potential returns per unit of risk. Transurban Group is currently generating about 0.02 per unit of risk. If you would invest 565.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 491.00 from holding Algoma Steel Group or generate 86.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.35% |
| Values | Daily Returns |
Algoma Steel Group vs. Transurban Group
Performance |
| Timeline |
| Algoma Steel Group |
| Transurban Group |
Algoma Steel and Transurban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Transurban
The main advantage of trading using opposite Algoma Steel and Transurban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Transurban 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 Transurban will offset losses from the drop in Transurban'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 |
| Transurban vs. Jiangsu Expressway | Transurban vs. MetLife | Transurban vs. Fortinet | Transurban vs. Western Digital |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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