Correlation Between Algoma Steel and Sabre Corpo

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

Diversification Opportunities for Algoma Steel and Sabre Corpo

0.17

Correlation Coefficient

Algoma Steel  Sabre Corpo

Average diversification

The 3 months correlation between Algoma and Sabre is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo 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 Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Algoma Steel i.e., Algoma Steel and Sabre Corpo go up and down completely randomly.

Pair Corralation between Algoma Steel and Sabre Corpo

Given the investment horizon of 90 days Algoma Steel is expected to generate 35.43 times less return on investment than Sabre Corpo. But when comparing it to its historical volatility, Algoma Steel Group is 1.7 times less risky than Sabre Corpo. It trades about 0.0 of its potential returns per unit of risk. Sabre Corpo is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  359.00  in Sabre Corpo on September 19, 2024 and sell it today you would earn a total of  44.50  from holding Sabre Corpo or generate 12.4% return on investment over 90 days.

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

Algoma Steel Group  vs.  Sabre Corpo

Algoma Steel Group

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, Algoma Steel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sabre Corpo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algoma Steel and Sabre Corpo

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

The idea behind Algoma Steel Group and Sabre Corpo 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.