Correlation Between Algoma Steel and Klondike Gold
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Klondike 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 Klondike 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 Klondike Gold Corp, you can compare the effects of market volatilities on Algoma Steel and Klondike 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 Klondike Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Klondike Gold.
Diversification Opportunities for Algoma Steel and Klondike Gold
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algoma and Klondike is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Klondike Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klondike Gold 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 Klondike Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klondike Gold Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Klondike Gold go up and down completely randomly.
Pair Corralation between Algoma Steel and Klondike Gold
Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the Klondike Gold. But the stock apears to be less risky and, when comparing its historical volatility, Algoma Steel Group is 1.85 times less risky than Klondike Gold. The stock trades about -0.23 of its potential returns per unit of risk. The Klondike Gold Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Klondike Gold Corp on December 29, 2024 and sell it today you would earn a total of 4.00 from holding Klondike Gold Corp or generate 57.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 96.83% |
Values | Daily Returns |
Algoma Steel Group vs. Klondike Gold Corp
Performance |
Timeline |
Algoma Steel Group |
Klondike Gold Corp |
Algoma Steel and Klondike Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Algoma Steel and Klondike Gold
The main advantage of trading using opposite Algoma Steel and Klondike Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Klondike 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 Klondike Gold will offset losses from the drop in Klondike Gold's long position.Algoma Steel vs. Friedman Industries | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
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Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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