Correlation Between Postmedia Network and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Postmedia Network 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 Postmedia Network and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postmedia Network Canada and Algoma Steel Group, you can compare the effects of market volatilities on Postmedia Network 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 Postmedia Network with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Algoma Steel.
Diversification Opportunities for Postmedia Network and Algoma Steel
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Postmedia and Algoma is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada 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 Postmedia Network 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 Postmedia Network Canada 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 Postmedia Network i.e., Postmedia Network and Algoma Steel go up and down completely randomly.
Pair Corralation between Postmedia Network and Algoma Steel
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the Algoma Steel. In addition to that, Postmedia Network is 1.47 times more volatile than Algoma Steel Group. It trades about -0.29 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about -0.43 per unit of volatility. If you would invest 1,238 in Algoma Steel Group on November 27, 2024 and sell it today you would lose (189.00) from holding Algoma Steel Group or give up 15.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Algoma Steel Group
Performance |
| Timeline |
| Postmedia Network Canada |
| Algoma Steel Group |
Postmedia Network and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Algoma Steel
The main advantage of trading using opposite Postmedia Network and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network 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.| Postmedia Network vs. HOME DEPOT CDR | Postmedia Network vs. Fairfax Financial Holdings | Postmedia Network vs. E L Financial Corp | Postmedia Network vs. Homerun Resources |
| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Champion Iron | Algoma Steel vs. Ero Copper Corp | Algoma Steel vs. West Fraser Timber |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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