Correlation Between Electra Battery and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Electra Battery 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 Electra Battery and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Battery Materials and Algoma Steel Group, you can compare the effects of market volatilities on Electra Battery 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 Electra Battery with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Algoma Steel.
Diversification Opportunities for Electra Battery and Algoma Steel
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electra and Algoma is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials 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 Electra Battery 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 Electra Battery Materials 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 Electra Battery i.e., Electra Battery and Algoma Steel go up and down completely randomly.
Pair Corralation between Electra Battery and Algoma Steel
Assuming the 90 days trading horizon Electra Battery Materials is expected to generate 2.23 times more return on investment than Algoma Steel. However, Electra Battery is 2.23 times more volatile than Algoma Steel Group. It trades about 0.04 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 58.00 in Electra Battery Materials on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Electra Battery Materials or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. Algoma Steel Group
Performance |
| Timeline |
| Electra Battery Materials |
| Algoma Steel Group |
Electra Battery and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Algoma Steel
The main advantage of trading using opposite Electra Battery and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery 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.| Electra Battery vs. First Majestic Silver | Electra Battery vs. Ivanhoe Energy | Electra Battery vs. Orezone Gold Corp | Electra Battery vs. Faraday Copper Corp |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Reliance Steel Aluminum | Algoma Steel vs. Universal Stainless Alloy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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