Correlation Between Algoma Steel and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal SA, you can compare the effects of market volatilities on Algoma Steel and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and ArcelorMittal.
Diversification Opportunities for Algoma Steel and ArcelorMittal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algoma and ArcelorMittal is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Algoma Steel i.e., Algoma Steel and ArcelorMittal go up and down completely randomly.
Pair Corralation between Algoma Steel and ArcelorMittal
Assuming the 90 days horizon Algoma Steel Group is expected to generate 3.19 times more return on investment than ArcelorMittal. However, Algoma Steel is 3.19 times more volatile than ArcelorMittal SA. It trades about 0.08 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.0 per unit of risk. If you would invest 130.00 in Algoma Steel Group on August 27, 2024 and sell it today you would earn a total of 96.00 from holding Algoma Steel Group or generate 73.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.56% |
| Values | Daily Returns |
Algoma Steel Group vs. ArcelorMittal SA
Performance |
| Timeline |
| Algoma Steel Group |
| ArcelorMittal SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Algoma Steel and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and ArcelorMittal
The main advantage of trading using opposite Algoma Steel and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Evolv Technologies Holdings | Algoma Steel vs. Valens Semiconductor |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Mesabi Trust | ArcelorMittal vs. Universal Stainless Alloy | ArcelorMittal vs. POSCO Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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