Correlation Between Globex Mining and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Globex Mining 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 Globex Mining and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Algoma Steel Group, you can compare the effects of market volatilities on Globex Mining 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 Globex Mining with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Algoma Steel.
Diversification Opportunities for Globex Mining and Algoma Steel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globex and Algoma is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises 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 Globex Mining 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and Algoma Steel go up and down completely randomly.
Pair Corralation between Globex Mining and Algoma Steel
Assuming the 90 days trading horizon Globex Mining is expected to generate 3.04 times less return on investment than Algoma Steel. But when comparing it to its historical volatility, Globex Mining Enterprises is 1.26 times less risky than Algoma Steel. It trades about 0.05 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 733.00 in Algoma Steel Group on September 3, 2024 and sell it today you would earn a total of 344.00 from holding Algoma Steel Group or generate 46.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Algoma Steel Group
Performance |
| Timeline |
| Globex Mining Enterprises |
| Algoma Steel Group |
Globex Mining and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Algoma Steel
The main advantage of trading using opposite Globex Mining and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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.| Globex Mining vs. Algoma Steel Group | Globex Mining vs. Champion Iron | Globex Mining vs. International Zeolite Corp | Globex Mining 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |