Correlation Between ALGOMA STEEL and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA, you can compare the effects of market volatilities on ALGOMA STEEL and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and UniCredit SpA.
Diversification Opportunities for ALGOMA STEEL and UniCredit SpA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALGOMA and UniCredit is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and UniCredit SpA go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and UniCredit SpA
Assuming the 90 days horizon ALGOMA STEEL is expected to generate 2.05 times less return on investment than UniCredit SpA. In addition to that, ALGOMA STEEL is 1.25 times more volatile than UniCredit SpA. It trades about 0.05 of its total potential returns per unit of risk. UniCredit SpA is currently generating about 0.13 per unit of volatility. If you would invest 1,172 in UniCredit SpA on September 20, 2024 and sell it today you would earn a total of 2,640 from holding UniCredit SpA or generate 225.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ALGOMA STEEL GROUP vs. UniCredit SpA
Performance |
Timeline |
ALGOMA STEEL GROUP |
UniCredit SpA |
ALGOMA STEEL and UniCredit SpA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ALGOMA STEEL and UniCredit SpA
The main advantage of trading using opposite ALGOMA STEEL and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.ALGOMA STEEL vs. Reliance Steel Aluminum | ALGOMA STEEL vs. Superior Plus Corp | ALGOMA STEEL vs. SIVERS SEMICONDUCTORS AB | ALGOMA STEEL vs. Norsk Hydro ASA |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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