Correlation Between STMICROELECTRONICS and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and ALGOMA STEEL.
Diversification Opportunities for STMICROELECTRONICS and ALGOMA STEEL
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between STMICROELECTRONICS and ALGOMA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and ALGOMA STEEL
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the ALGOMA STEEL. In addition to that, STMICROELECTRONICS is 1.48 times more volatile than ALGOMA STEEL GROUP. It trades about -0.16 of its total potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about -0.15 per unit of volatility. If you would invest 860.00 in ALGOMA STEEL GROUP on November 7, 2024 and sell it today you would lose (50.00) from holding ALGOMA STEEL GROUP or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
STMICROELECTRONICS vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| STMICROELECTRONICS |
| ALGOMA STEEL GROUP |
STMICROELECTRONICS and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and ALGOMA STEEL
The main advantage of trading using opposite STMICROELECTRONICS and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. Fukuyama Transporting Co | STMICROELECTRONICS vs. East Africa Metals | STMICROELECTRONICS vs. ARDAGH METAL PACDL 0001 | STMICROELECTRONICS vs. DISTRICT METALS |
| ALGOMA STEEL vs. Calibre Mining Corp | ALGOMA STEEL vs. East Africa Metals | ALGOMA STEEL vs. Lamar Advertising | ALGOMA STEEL vs. MUTUIONLINE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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