Correlation Between Algoma Steel and Allied Gaming
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Allied Gaming 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 Allied Gaming 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 Allied Gaming Entertainment, you can compare the effects of market volatilities on Algoma Steel and Allied Gaming 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 Allied Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Allied Gaming.
Diversification Opportunities for Algoma Steel and Allied Gaming
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algoma and Allied is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Allied Gaming Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gaming Entert 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 Allied Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gaming Entert has no effect on the direction of Algoma Steel i.e., Algoma Steel and Allied Gaming go up and down completely randomly.
Pair Corralation between Algoma Steel and Allied Gaming
Assuming the 90 days horizon Algoma Steel is expected to generate 6.38 times less return on investment than Allied Gaming. But when comparing it to its historical volatility, Algoma Steel Group is 4.84 times less risky than Allied Gaming. It trades about 0.05 of its potential returns per unit of risk. Allied Gaming Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Allied Gaming Entertainment on August 24, 2024 and sell it today you would lose (0.98) from holding Allied Gaming Entertainment or give up 98.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.41% |
| Values | Daily Returns |
Algoma Steel Group vs. Allied Gaming Entertainment
Performance |
| Timeline |
| Algoma Steel Group |
| Allied Gaming Entert |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Algoma Steel and Allied Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Allied Gaming
The main advantage of trading using opposite Algoma Steel and Allied Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Allied Gaming 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 Allied Gaming will offset losses from the drop in Allied Gaming's long position.| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Evolv Technologies Holdings | Algoma Steel vs. Valens Semiconductor |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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