Correlation Between Liberty Gold and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Liberty Gold 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 Liberty Gold and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Gold Corp and Algoma Steel Group, you can compare the effects of market volatilities on Liberty Gold 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 Liberty Gold with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Gold and Algoma Steel.
Diversification Opportunities for Liberty Gold and Algoma Steel
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and Algoma is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold 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 Liberty Gold 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 Liberty Gold 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 Liberty Gold i.e., Liberty Gold and Algoma Steel go up and down completely randomly.
Pair Corralation between Liberty Gold and Algoma Steel
Assuming the 90 days horizon Liberty Gold Corp is expected to under-perform the Algoma Steel. In addition to that, Liberty Gold is 1.46 times more volatile than Algoma Steel Group. It trades about -0.13 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.05 per unit of volatility. If you would invest 1,054 in Algoma Steel Group on September 2, 2024 and sell it today you would earn a total of 23.00 from holding Algoma Steel Group or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Gold Corp vs. Algoma Steel Group
Performance |
| Timeline |
| Liberty Gold Corp |
| Algoma Steel Group |
Liberty Gold and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Gold and Algoma Steel
The main advantage of trading using opposite Liberty Gold and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Gold 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.| Liberty Gold vs. South32 Limited | Liberty Gold vs. NioCorp Developments Ltd | Liberty Gold vs. HUMANA INC | Liberty Gold vs. SCOR PK |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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