Correlation Between Algoma Steel and Wescan Goldfields
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Wescan Goldfields 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 Wescan Goldfields 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 Wescan Goldfields, you can compare the effects of market volatilities on Algoma Steel and Wescan Goldfields 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 Wescan Goldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Wescan Goldfields.
Diversification Opportunities for Algoma Steel and Wescan Goldfields
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and Wescan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Wescan Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wescan Goldfields 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 Wescan Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wescan Goldfields has no effect on the direction of Algoma Steel i.e., Algoma Steel and Wescan Goldfields go up and down completely randomly.
Pair Corralation between Algoma Steel and Wescan Goldfields
Given the investment horizon of 90 days Algoma Steel is expected to generate 1.37 times less return on investment than Wescan Goldfields. But when comparing it to its historical volatility, Algoma Steel Group is 4.37 times less risky than Wescan Goldfields. It trades about 0.06 of its potential returns per unit of risk. Wescan Goldfields is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Wescan Goldfields on September 4, 2024 and sell it today you would lose (3.00) from holding Wescan Goldfields or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Algoma Steel Group vs. Wescan Goldfields
Performance |
| Timeline |
| Algoma Steel Group |
| Wescan Goldfields |
Algoma Steel and Wescan Goldfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Wescan Goldfields
The main advantage of trading using opposite Algoma Steel and Wescan Goldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Wescan Goldfields 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 Wescan Goldfields will offset losses from the drop in Wescan Goldfields' 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 |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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