Correlation Between Dore Copper and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Dore Copper 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 Dore Copper and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dore Copper Mining and Algoma Steel Group, you can compare the effects of market volatilities on Dore Copper 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 Dore Copper with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dore Copper and Algoma Steel.
Diversification Opportunities for Dore Copper and Algoma Steel
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dore and Algoma is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dore Copper Mining 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 Dore Copper 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 Dore Copper Mining 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 Dore Copper i.e., Dore Copper and Algoma Steel go up and down completely randomly.
Pair Corralation between Dore Copper and Algoma Steel
Assuming the 90 days trading horizon Dore Copper Mining is expected to generate 2.66 times more return on investment than Algoma Steel. However, Dore Copper is 2.66 times more volatile than Algoma Steel Group. It trades about 0.06 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.13 per unit of risk. If you would invest 11.00 in Dore Copper Mining on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Dore Copper Mining or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dore Copper Mining vs. Algoma Steel Group
Performance |
| Timeline |
| Dore Copper Mining |
| Algoma Steel Group |
Dore Copper and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dore Copper and Algoma Steel
The main advantage of trading using opposite Dore Copper and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dore Copper 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.| Dore Copper vs. Algoma Steel Group | Dore Copper vs. Champion Iron | Dore Copper vs. International Zeolite Corp | Dore Copper vs. European Residential Real |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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