Correlation Between ALGOMA STEEL and Pick N

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

Diversification Opportunities for ALGOMA STEEL and Pick N

-0.16

Correlation Coefficient

ALGOMA STEEL  Pick N

Good diversification

The 3 months correlation between ALGOMA and Pick is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Pick N go up and down completely randomly.

Pair Corralation between ALGOMA STEEL and Pick N

Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the Pick N. In addition to that, ALGOMA STEEL is 1.27 times more volatile than Pick n Pay. It trades about -0.3 of its total potential returns per unit of risk. Pick n Pay is currently generating about 0.0 per unit of volatility. If you would invest  160.00  in Pick n Pay on October 15, 2024 and sell it today you would lose (1.00) from holding Pick n Pay or give up 0.62% of portfolio value over 90 days.

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

ALGOMA STEEL GROUP  vs.  Pick n Pay

ALGOMA STEEL GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALGOMA STEEL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pick n Pay

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pick n Pay are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pick N reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALGOMA STEEL and Pick N

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

The idea behind ALGOMA STEEL GROUP and Pick n Pay 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.