Correlation Between Ero Copper and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Ero 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 Ero 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 Ero Copper Corp and Algoma Steel Group, you can compare the effects of market volatilities on Ero 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 Ero Copper with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ero Copper and Algoma Steel.
Diversification Opportunities for Ero Copper and Algoma Steel
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ero and Algoma is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp 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 Ero 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 Ero Copper Corp 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 Ero Copper i.e., Ero Copper and Algoma Steel go up and down completely randomly.
Pair Corralation between Ero Copper and Algoma Steel
Assuming the 90 days trading horizon Ero Copper Corp is expected to under-perform the Algoma Steel. In addition to that, Ero Copper is 1.08 times more volatile than Algoma Steel Group. It trades about -0.28 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.1 per unit of volatility. If you would invest 1,021 in Algoma Steel Group on August 25, 2024 and sell it today you would earn a total of 105.00 from holding Algoma Steel Group or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Ero Copper Corp vs. Algoma Steel Group
Performance |
| Timeline |
| Ero Copper Corp |
| Algoma Steel Group |
Ero Copper and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ero Copper and Algoma Steel
The main advantage of trading using opposite Ero Copper and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ero 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.| Ero Copper vs. SSR Mining | Ero Copper vs. MAG Silver Corp | Ero Copper vs. Torex Gold Resources | Ero Copper vs. Pan American Silver |
| Algoma Steel vs. Labrador Gold Corp | Algoma Steel vs. Aurion Resources | Algoma Steel vs. Puma Exploration | Algoma Steel vs. Golden Star Resource |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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