Correlation Between ALGOMA STEEL and ASHFORD HOSPITTRUST

Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and ASHFORD HOSPITTRUST 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 ALGOMA STEEL and ASHFORD HOSPITTRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALGOMA STEEL GROUP and ASHFORD HOSPITTRUST, you can compare the effects of market volatilities on ALGOMA STEEL and ASHFORD HOSPITTRUST 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 ALGOMA STEEL with a short position of ASHFORD HOSPITTRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and ASHFORD HOSPITTRUST.

Diversification Opportunities for ALGOMA STEEL and ASHFORD HOSPITTRUST

-0.32

Correlation Coefficient

ALGOMA STEEL  ASHFORD HOSPITTRUST

Very good diversification

The 3 months correlation between ALGOMA and ASHFORD is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and ASHFORD HOSPITTRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHFORD HOSPITTRUST and ALGOMA STEEL 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 ALGOMA STEEL GROUP are associated (or correlated) with ASHFORD HOSPITTRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHFORD HOSPITTRUST has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and ASHFORD HOSPITTRUST go up and down completely randomly.

Pair Corralation between ALGOMA STEEL and ASHFORD HOSPITTRUST

If you would invest  505.00  in ASHFORD HOSPITTRUST on October 6, 2024 and sell it today you would earn a total of  0.00  from holding ASHFORD HOSPITTRUST or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

ALGOMA STEEL GROUP  vs.  ASHFORD HOSPITTRUST

ALGOMA STEEL GROUP

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALGOMA STEEL GROUP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ALGOMA STEEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ASHFORD HOSPITTRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASHFORD HOSPITTRUST has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ALGOMA STEEL and ASHFORD HOSPITTRUST

The main advantage of trading using opposite ALGOMA STEEL and ASHFORD HOSPITTRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST will offset losses from the drop in ASHFORD HOSPITTRUST's long position.

The idea behind ALGOMA STEEL GROUP and ASHFORD HOSPITTRUST 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.

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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.