Correlation Between ALGOMA STEEL and Humana

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

Diversification Opportunities for ALGOMA STEEL and Humana

0.37

Correlation Coefficient

ALGOMA STEEL  Humana

Weak diversification

The 3 months correlation between ALGOMA and Humana is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc 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 Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Humana go up and down completely randomly.

Pair Corralation between ALGOMA STEEL and Humana

Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to generate 1.0 times more return on investment than Humana. However, ALGOMA STEEL is 1.0 times more volatile than Humana Inc. It trades about 0.05 of its potential returns per unit of risk. Humana Inc is currently generating about -0.04 per unit of risk. If you would invest  564.00  in ALGOMA STEEL GROUP on September 16, 2024 and sell it today you would earn a total of  381.00  from holding ALGOMA STEEL GROUP or generate 67.55% return on investment over 90 days.

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

ALGOMA STEEL GROUP  vs.  Humana Inc

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.

Humana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Humana is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALGOMA STEEL and Humana

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

The idea behind ALGOMA STEEL GROUP and Humana Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..