Correlation Between NEXE Innovations and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both NEXE Innovations 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 NEXE Innovations and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXE Innovations and Algoma Steel Group, you can compare the effects of market volatilities on NEXE Innovations 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 NEXE Innovations with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXE Innovations and Algoma Steel.
Diversification Opportunities for NEXE Innovations and Algoma Steel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NEXE and Algoma is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NEXE Innovations 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 NEXE Innovations 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 NEXE Innovations 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 NEXE Innovations i.e., NEXE Innovations and Algoma Steel go up and down completely randomly.
Pair Corralation between NEXE Innovations and Algoma Steel
Assuming the 90 days trading horizon NEXE Innovations is expected to generate 2.02 times more return on investment than Algoma Steel. However, NEXE Innovations is 2.02 times more volatile than Algoma Steel Group. It trades about 0.09 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.02 per unit of risk. If you would invest 32.00 in NEXE Innovations on September 12, 2024 and sell it today you would earn a total of 7.00 from holding NEXE Innovations or generate 21.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXE Innovations vs. Algoma Steel Group
Performance |
| Timeline |
| NEXE Innovations |
| Algoma Steel Group |
NEXE Innovations and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXE Innovations and Algoma Steel
The main advantage of trading using opposite NEXE Innovations and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXE Innovations 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.| NEXE Innovations vs. Ressources Minieres Radisson | NEXE Innovations vs. Galantas Gold Corp | NEXE Innovations vs. Red Pine Exploration | NEXE Innovations vs. Kore Mining |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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