Correlation Between Algoma Steel and Aris Mining

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

Diversification Opportunities for Algoma Steel and Aris Mining

-0.71

Correlation Coefficient

Algoma Steel  Aris Mining

Pay attention - limited upside

The 3 months correlation between Algoma and Aris is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining 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 Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Algoma Steel i.e., Algoma Steel and Aris Mining go up and down completely randomly.

Pair Corralation between Algoma Steel and Aris Mining

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the Aris Mining. In addition to that, Algoma Steel is 1.13 times more volatile than Aris Mining. It trades about -0.21 of its total potential returns per unit of risk. Aris Mining is currently generating about 0.15 per unit of volatility. If you would invest  358.00  in Aris Mining on December 25, 2024 and sell it today you would earn a total of  95.00  from holding Aris Mining or generate 26.54% return on investment over 90 days.

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

Algoma Steel Group  vs.  Aris Mining

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. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aris Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting primary indicators, Aris Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algoma Steel and Aris Mining

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

The idea behind Algoma Steel Group and Aris Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.