Correlation Between Algoma Steel and Enduro Metals

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

Diversification Opportunities for Algoma Steel and Enduro Metals

0.52

Correlation Coefficient

Algoma Steel  Enduro Metals

Very weak diversification

The 3 months correlation between Algoma and Enduro is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Enduro Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals 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 Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Enduro Metals go up and down completely randomly.

Pair Corralation between Algoma Steel and Enduro Metals

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the Enduro Metals. But the stock apears to be less risky and, when comparing its historical volatility, Algoma Steel Group is 1.65 times less risky than Enduro Metals. The stock trades about -0.23 of its potential returns per unit of risk. The Enduro Metals Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Enduro Metals Corp on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Enduro Metals Corp or generate 0.0% return on investment over 90 days.

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

Algoma Steel Group  vs.  Enduro Metals Corp

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.

Enduro Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enduro Metals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Enduro Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Algoma Steel and Enduro Metals

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

The idea behind Algoma Steel Group and Enduro Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.