Correlation Between O3 Mining and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both O3 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 O3 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 O3 Mining and Algoma Steel Group, you can compare the effects of market volatilities on O3 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 O3 Mining with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of O3 Mining and Algoma Steel.
Diversification Opportunities for O3 Mining and Algoma Steel
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between OIII and Algoma is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding O3 Mining 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 O3 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 O3 Mining 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 O3 Mining i.e., O3 Mining and Algoma Steel go up and down completely randomly.
Pair Corralation between O3 Mining and Algoma Steel
Assuming the 90 days trading horizon O3 Mining is expected to under-perform the Algoma Steel. In addition to that, O3 Mining is 1.1 times more volatile than Algoma Steel Group. It trades about -0.02 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.06 per unit of volatility. If you would invest 565.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 491.00 from holding Algoma Steel Group or generate 86.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
O3 Mining vs. Algoma Steel Group
Performance |
| Timeline |
| O3 Mining |
| Algoma Steel Group |
O3 Mining and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with O3 Mining and Algoma Steel
The main advantage of trading using opposite O3 Mining and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O3 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.| O3 Mining vs. First Majestic Silver | O3 Mining vs. Ivanhoe Energy | O3 Mining vs. Orezone Gold Corp | O3 Mining vs. Faraday Copper Corp |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Reliance Steel Aluminum | Algoma Steel vs. Universal Stainless Alloy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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