Correlation Between Asure Software and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Asure Software and Algoma Steel 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 Asure Software and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asure Software and Algoma Steel Group, you can compare the effects of market volatilities on Asure Software and Algoma Steel 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 Asure Software with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asure Software and Algoma Steel.
Diversification Opportunities for Asure Software and Algoma Steel
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Asure and Algoma is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Asure Software 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 Asure Software are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Asure Software i.e., Asure Software and Algoma Steel go up and down completely randomly.
Pair Corralation between Asure Software and Algoma Steel
Given the investment horizon of 90 days Asure Software is expected to generate 1.44 times less return on investment than Algoma Steel. In addition to that, Asure Software is 1.72 times more volatile than Algoma Steel Group. It trades about 0.04 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.09 per unit of volatility. If you would invest 1,055 in Algoma Steel Group on August 28, 2024 and sell it today you would earn a total of 52.00 from holding Algoma Steel Group or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asure Software vs. Algoma Steel Group
Performance |
| Timeline |
| Asure Software |
| Algoma Steel Group |
Asure Software and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asure Software and Algoma Steel
The main advantage of trading using opposite Asure Software and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asure Software position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.The idea behind Asure Software and Algoma Steel Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Algoma Steel vs. Labrador Gold Corp | Algoma Steel vs. Aurion Resources | Algoma Steel vs. Puma Exploration | Algoma Steel vs. Golden Star Resource |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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