Correlation Between Converge Technology and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Converge Technology 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 Converge Technology and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Technology Solutions and Algoma Steel Group, you can compare the effects of market volatilities on Converge Technology 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 Converge Technology with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Technology and Algoma Steel.
Diversification Opportunities for Converge Technology and Algoma Steel
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Converge and Algoma is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Converge Technology Solutions 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 Converge Technology 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 Converge Technology Solutions 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 Converge Technology i.e., Converge Technology and Algoma Steel go up and down completely randomly.
Pair Corralation between Converge Technology and Algoma Steel
Assuming the 90 days trading horizon Converge Technology Solutions is expected to generate 1.17 times more return on investment than Algoma Steel. However, Converge Technology is 1.17 times more volatile than Algoma Steel Group. It trades about 0.07 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.05 per unit of risk. If you would invest 315.00 in Converge Technology Solutions on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Converge Technology Solutions or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Converge Technology Solutions vs. Algoma Steel Group
Performance |
| Timeline |
| Converge Technology |
| Algoma Steel Group |
Converge Technology and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Technology and Algoma Steel
The main advantage of trading using opposite Converge Technology and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Technology 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.| Converge Technology vs. Berkshire Hathaway CDR | Converge Technology vs. JPMorgan Chase Co | Converge Technology vs. Bank of America | Converge Technology vs. Alphabet Inc CDR |
| Algoma Steel vs. First Majestic Silver | Algoma Steel vs. Ivanhoe Energy | Algoma Steel vs. Orezone Gold Corp | Algoma Steel vs. Faraday Copper Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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