Correlation Between LLOYDS and Algoma Steel
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By analyzing existing cross correlation between LLOYDS BKG GROUP and Algoma Steel Group, you can compare the effects of market volatilities on LLOYDS 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 LLOYDS with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LLOYDS and Algoma Steel.
Diversification Opportunities for LLOYDS and Algoma Steel
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LLOYDS and Algoma is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS BKG GROUP 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 LLOYDS 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 LLOYDS BKG GROUP 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 LLOYDS i.e., LLOYDS and Algoma Steel go up and down completely randomly.
Pair Corralation between LLOYDS and Algoma Steel
Assuming the 90 days trading horizon LLOYDS is expected to generate 16.34 times less return on investment than Algoma Steel. But when comparing it to its historical volatility, LLOYDS BKG GROUP is 5.64 times less risky than Algoma Steel. It trades about 0.03 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 643.00 in Algoma Steel Group on September 4, 2024 and sell it today you would earn a total of 413.00 from holding Algoma Steel Group or generate 64.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.14% |
| Values | Daily Returns |
LLOYDS BKG GROUP vs. Algoma Steel Group
Performance |
| Timeline |
| LLOYDS BKG GROUP |
| Algoma Steel Group |
LLOYDS and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LLOYDS and Algoma Steel
The main advantage of trading using opposite LLOYDS and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LLOYDS 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.The idea behind LLOYDS BKG GROUP and Algoma Steel Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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