Correlation Between East Side and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both East Side 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 East Side and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Side Games and Algoma Steel Group, you can compare the effects of market volatilities on East Side 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 East Side with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Algoma Steel.
Diversification Opportunities for East Side and Algoma Steel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Algoma is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games 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 East Side 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 East Side Games 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 East Side i.e., East Side and Algoma Steel go up and down completely randomly.
Pair Corralation between East Side and Algoma Steel
Assuming the 90 days trading horizon East Side Games is expected to under-perform the Algoma Steel. In addition to that, East Side is 1.61 times more volatile than Algoma Steel Group. It trades about -0.22 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.08 per unit of volatility. If you would invest 1,447 in Algoma Steel Group on September 3, 2024 and sell it today you would earn a total of 55.00 from holding Algoma Steel Group or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Side Games vs. Algoma Steel Group
Performance |
| Timeline |
| East Side Games |
| Algoma Steel Group |
East Side and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Side and Algoma Steel
The main advantage of trading using opposite East Side and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side 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.| East Side vs. Telus Corp | East Side vs. Toronto Dominion Bank | East Side vs. TC Energy Corp | East Side vs. Manulife Financial Corp |
| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Champion Iron | Algoma Steel vs. International Zeolite Corp | Algoma Steel vs. European Residential Real |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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