Correlation Between China Tontine and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both China Tontine 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 China Tontine and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Tontine Wines and Algoma Steel Group, you can compare the effects of market volatilities on China Tontine 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 China Tontine with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and Algoma Steel.
Diversification Opportunities for China Tontine and Algoma Steel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Algoma is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines 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 China Tontine 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 China Tontine Wines 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 China Tontine i.e., China Tontine and Algoma Steel go up and down completely randomly.
Pair Corralation between China Tontine and Algoma Steel
Assuming the 90 days horizon China Tontine Wines is expected to generate 38.1 times more return on investment than Algoma Steel. However, China Tontine is 38.1 times more volatile than Algoma Steel Group. It trades about 0.09 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.06 per unit of risk. If you would invest 1.50 in China Tontine Wines on September 3, 2024 and sell it today you would earn a total of 5.60 from holding China Tontine Wines or generate 373.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.37% |
| Values | Daily Returns |
China Tontine Wines vs. Algoma Steel Group
Performance |
| Timeline |
| China Tontine Wines |
| Algoma Steel Group |
China Tontine and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Tontine and Algoma Steel
The main advantage of trading using opposite China Tontine and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Tontine 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.| China Tontine vs. Diageo PLC ADR | China Tontine vs. Constellation Brands Class | China Tontine vs. Brown Forman | China Tontine vs. Thai Beverage PCL |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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