Correlation Between Algoma Steel and NorthWest Healthcare

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

Diversification Opportunities for Algoma Steel and NorthWest Healthcare

-0.83

Correlation Coefficient

Algoma Steel  NorthWest Healthcare

Pay attention - limited upside

The 3 months correlation between Algoma and NorthWest is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and NorthWest Healthcare Propertie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWest Healthcare 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 NorthWest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWest Healthcare has no effect on the direction of Algoma Steel i.e., Algoma Steel and NorthWest Healthcare go up and down completely randomly.

Pair Corralation between Algoma Steel and NorthWest Healthcare

Assuming the 90 days trading horizon Algoma Steel Group is expected to under-perform the NorthWest Healthcare. In addition to that, Algoma Steel is 2.08 times more volatile than NorthWest Healthcare Properties. It trades about -0.21 of its total potential returns per unit of risk. NorthWest Healthcare Properties is currently generating about 0.14 per unit of volatility. If you would invest  442.00  in NorthWest Healthcare Properties on December 24, 2024 and sell it today you would earn a total of  62.00  from holding NorthWest Healthcare Properties or generate 14.03% return on investment over 90 days.

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

Algoma Steel Group  vs.  NorthWest Healthcare Propertie

Algoma Steel Group

Risk-Adjusted Performance

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

NorthWest Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NorthWest Healthcare Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, NorthWest Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algoma Steel and NorthWest Healthcare

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

The idea behind Algoma Steel Group and NorthWest Healthcare Properties 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.