Correlation Between Xtra Gold and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Xtra Gold 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 Xtra Gold and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtra Gold Resources Corp and Algoma Steel Group, you can compare the effects of market volatilities on Xtra Gold 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 Xtra Gold with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtra Gold and Algoma Steel.
Diversification Opportunities for Xtra Gold and Algoma Steel
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xtra and Algoma is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Xtra Gold Resources Corp 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 Xtra Gold 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 Xtra Gold Resources Corp 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 Xtra Gold i.e., Xtra Gold and Algoma Steel go up and down completely randomly.
Pair Corralation between Xtra Gold and Algoma Steel
Assuming the 90 days trading horizon Xtra Gold Resources Corp is expected to generate 1.14 times more return on investment than Algoma Steel. However, Xtra Gold is 1.14 times more volatile than Algoma Steel Group. It trades about 0.17 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.02 per unit of risk. If you would invest 142.00 in Xtra Gold Resources Corp on September 12, 2024 and sell it today you would earn a total of 41.00 from holding Xtra Gold Resources Corp or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtra Gold Resources Corp vs. Algoma Steel Group
Performance |
| Timeline |
| Xtra Gold Resources |
| Algoma Steel Group |
Xtra Gold and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtra Gold and Algoma Steel
The main advantage of trading using opposite Xtra Gold and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtra Gold 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.| Xtra Gold vs. Ressources Minieres Radisson | Xtra Gold vs. Galantas Gold Corp | Xtra Gold vs. Red Pine Exploration | Xtra Gold vs. Kore Mining |
| Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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