Correlation Between Algoma Steel and Metallic Minerals

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

Diversification Opportunities for Algoma Steel and Metallic Minerals

-0.76

Correlation Coefficient

Algoma Steel  Metallic Minerals

Pay attention - limited upside

The 3 months correlation between Algoma and Metallic is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Metallic Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallic Minerals 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 Metallic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallic Minerals Corp has no effect on the direction of Algoma Steel i.e., Algoma Steel and Metallic Minerals go up and down completely randomly.

Pair Corralation between Algoma Steel and Metallic Minerals

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the Metallic Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Algoma Steel Group is 1.98 times less risky than Metallic Minerals. The stock trades about -0.23 of its potential returns per unit of risk. The Metallic Minerals Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Metallic Minerals Corp on December 29, 2024 and sell it today you would earn a total of  11.00  from holding Metallic Minerals Corp or generate 84.62% 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.  Metallic Minerals 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.

Metallic Minerals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metallic Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algoma Steel and Metallic Minerals

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

The idea behind Algoma Steel Group and Metallic Minerals 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..