Correlation Between Algoma Steel and Metalero Mining

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

Diversification Opportunities for Algoma Steel and Metalero Mining

0.12

Correlation Coefficient

Algoma Steel  Metalero Mining

Average diversification

The 3 months correlation between Algoma and Metalero is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Metalero Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalero Mining Corp 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 Metalero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalero Mining Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Metalero Mining go up and down completely randomly.

Pair Corralation between Algoma Steel and Metalero Mining

Assuming the 90 days trading horizon Algoma Steel Group is expected to under-perform the Metalero Mining. In addition to that, Algoma Steel is 1.03 times more volatile than Metalero Mining Corp. It trades about -0.28 of its total potential returns per unit of risk. Metalero Mining Corp is currently generating about 0.01 per unit of volatility. If you would invest  14.00  in Metalero Mining Corp on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Metalero Mining Corp or generate 0.0% 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.  Metalero Mining Corp

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. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Metalero Mining Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Metalero Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Metalero Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Algoma Steel and Metalero Mining

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

The idea behind Algoma Steel Group and Metalero Mining Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.