Correlation Between Algoma Steel and Carlin Gold

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

Diversification Opportunities for Algoma Steel and Carlin Gold

-0.63

Correlation Coefficient

Algoma Steel  Carlin Gold

Excellent diversification

The 3 months correlation between Algoma and Carlin is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Carlin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlin Gold 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 Carlin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlin Gold has no effect on the direction of Algoma Steel i.e., Algoma Steel and Carlin Gold go up and down completely randomly.

Pair Corralation between Algoma Steel and Carlin Gold

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the Carlin Gold. But the stock apears to be less risky and, when comparing its historical volatility, Algoma Steel Group is 1.87 times less risky than Carlin Gold. The stock trades about -0.23 of its potential returns per unit of risk. The Carlin Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Carlin Gold on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Carlin Gold or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Algoma Steel Group  vs.  Carlin Gold

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.

Carlin Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlin Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Carlin Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algoma Steel and Carlin Gold

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

The idea behind Algoma Steel Group and Carlin Gold 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.