Correlation Between NGEx Minerals and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both NGEx Minerals 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 NGEx Minerals and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NGEx Minerals and Algoma Steel Group, you can compare the effects of market volatilities on NGEx Minerals 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 NGEx Minerals with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGEx Minerals and Algoma Steel.
Diversification Opportunities for NGEx Minerals and Algoma Steel
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NGEx and Algoma is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NGEx Minerals 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 NGEx Minerals 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 NGEx Minerals 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 NGEx Minerals i.e., NGEx Minerals and Algoma Steel go up and down completely randomly.
Pair Corralation between NGEx Minerals and Algoma Steel
Assuming the 90 days trading horizon NGEx Minerals is expected to generate 0.81 times more return on investment than Algoma Steel. However, NGEx Minerals is 1.24 times less risky than Algoma Steel. It trades about 0.13 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.08 per unit of risk. If you would invest 1,186 in NGEx Minerals on September 1, 2024 and sell it today you would earn a total of 69.00 from holding NGEx Minerals or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGEx Minerals vs. Algoma Steel Group
Performance |
| Timeline |
| NGEx Minerals |
| Algoma Steel Group |
NGEx Minerals and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGEx Minerals and Algoma Steel
The main advantage of trading using opposite NGEx Minerals and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGEx Minerals 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.| NGEx Minerals vs. Algoma Steel Group | NGEx Minerals vs. Queens Road Capital | NGEx Minerals vs. Champion Iron | NGEx Minerals vs. DIRTT Environmental Solutions |
| Algoma Steel vs. First Majestic Silver | Algoma Steel vs. Ivanhoe Energy | Algoma Steel vs. Orezone Gold Corp | Algoma Steel vs. Faraday Copper Corp |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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