Correlation Between Starcore International and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Starcore International 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 Starcore International and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starcore International Mines and Algoma Steel Group, you can compare the effects of market volatilities on Starcore International 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 Starcore International with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starcore International and Algoma Steel.
Diversification Opportunities for Starcore International and Algoma Steel
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Starcore and Algoma is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Starcore International Mines 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 Starcore International 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 Starcore International Mines 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 Starcore International i.e., Starcore International and Algoma Steel go up and down completely randomly.
Pair Corralation between Starcore International and Algoma Steel
Assuming the 90 days trading horizon Starcore International Mines is expected to generate 2.97 times more return on investment than Algoma Steel. However, Starcore International is 2.97 times more volatile than Algoma Steel Group. It trades about 0.02 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.06 per unit of risk. If you would invest 21.00 in Starcore International Mines on September 4, 2024 and sell it today you would lose (7.00) from holding Starcore International Mines or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Starcore International Mines vs. Algoma Steel Group
Performance |
| Timeline |
| Starcore International |
| Algoma Steel Group |
Starcore International and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starcore International and Algoma Steel
The main advantage of trading using opposite Starcore International and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starcore International 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.| Starcore International vs. First Majestic Silver | Starcore International vs. Ivanhoe Energy | Starcore International vs. Orezone Gold Corp | Starcore International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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