Correlation Between ALGOMA STEEL and Allstate

Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Allstate 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 Allstate 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 The Allstate, you can compare the effects of market volatilities on ALGOMA STEEL and Allstate 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 Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Allstate.

Diversification Opportunities for ALGOMA STEEL and Allstate

0.53

Correlation Coefficient

ALGOMA STEEL  Allstate

Very weak diversification

The 3 months correlation between ALGOMA and Allstate is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Allstate go up and down completely randomly.

Pair Corralation between ALGOMA STEEL and Allstate

Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 1.79 times more return on investment than Allstate. However, ALGOMA STEEL is 1.79 times more volatile than The Allstate. It trades about -0.06 of its potential returns per unit of risk. The Allstate is currently generating about -0.12 per unit of risk. If you would invest  955.00  in ALGOMA STEEL GROUP on October 8, 2024 and sell it today you would lose (25.00) from holding ALGOMA STEEL GROUP or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ALGOMA STEEL GROUP  vs.  The Allstate

ALGOMA STEEL GROUP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALGOMA STEEL GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALGOMA STEEL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Allstate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Allstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALGOMA STEEL and Allstate

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

The idea behind ALGOMA STEEL GROUP and The Allstate 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.