Correlation Between Tinka Resources and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Tinka Resources 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 Tinka Resources and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tinka Resources Limited and Algoma Steel Group, you can compare the effects of market volatilities on Tinka Resources 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 Tinka Resources with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinka Resources and Algoma Steel.
Diversification Opportunities for Tinka Resources and Algoma Steel
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tinka and Algoma is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tinka Resources Limited 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 Tinka Resources 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 Tinka Resources Limited 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 Tinka Resources i.e., Tinka Resources and Algoma Steel go up and down completely randomly.
Pair Corralation between Tinka Resources and Algoma Steel
Given the investment horizon of 90 days Tinka Resources is expected to generate 1.53 times less return on investment than Algoma Steel. In addition to that, Tinka Resources is 1.81 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 795.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 261.00 from holding Algoma Steel Group or generate 32.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tinka Resources Limited vs. Algoma Steel Group
Performance |
| Timeline |
| Tinka Resources |
| Algoma Steel Group |
Tinka Resources and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tinka Resources and Algoma Steel
The main advantage of trading using opposite Tinka Resources and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tinka Resources 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.| Tinka Resources vs. First Majestic Silver | Tinka Resources vs. Ivanhoe Energy | Tinka Resources vs. Orezone Gold Corp | Tinka Resources 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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