Correlation Between VULCAN MATERIALS and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS 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 VULCAN MATERIALS and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on VULCAN MATERIALS 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 VULCAN MATERIALS with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and ALGOMA STEEL.
Diversification Opportunities for VULCAN MATERIALS and ALGOMA STEEL
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VULCAN and ALGOMA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS i.e., VULCAN MATERIALS and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and ALGOMA STEEL
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 1.25 times less return on investment than ALGOMA STEEL. But when comparing it to its historical volatility, VULCAN MATERIALS is 1.44 times less risky than ALGOMA STEEL. It trades about 0.08 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 614.00 in ALGOMA STEEL GROUP on August 29, 2024 and sell it today you would earn a total of 436.00 from holding ALGOMA STEEL GROUP or generate 71.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VULCAN MATERIALS vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| VULCAN MATERIALS |
| ALGOMA STEEL GROUP |
VULCAN MATERIALS and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and ALGOMA STEEL
The main advantage of trading using opposite VULCAN MATERIALS and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS 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.| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
| ALGOMA STEEL vs. PLAY2CHILL SA ZY | ALGOMA STEEL vs. GREENX METALS LTD | ALGOMA STEEL vs. Harmony Gold Mining | ALGOMA STEEL vs. GRIFFIN MINING LTD |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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