Correlation Between Algoma Steel and 808513BQ7

Can any of the company-specific risk be diversified away by investing in both Algoma Steel and 808513BQ7 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 808513BQ7 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 SCHW 5095707 13 MAY 26, you can compare the effects of market volatilities on Algoma Steel and 808513BQ7 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 808513BQ7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and 808513BQ7.

Diversification Opportunities for Algoma Steel and 808513BQ7

0.27

Correlation Coefficient

Algoma Steel  808513BQ7

Modest diversification

The 3 months correlation between Algoma and 808513BQ7 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and SCHW 5095707 13 MAY 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHW 5095707 13 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 808513BQ7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHW 5095707 13 has no effect on the direction of Algoma Steel i.e., Algoma Steel and 808513BQ7 go up and down completely randomly.

Pair Corralation between Algoma Steel and 808513BQ7

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the 808513BQ7. In addition to that, Algoma Steel is 9.64 times more volatile than SCHW 5095707 13 MAY 26. It trades about -0.23 of its total potential returns per unit of risk. SCHW 5095707 13 MAY 26 is currently generating about -0.17 per unit of volatility. If you would invest  10,001  in SCHW 5095707 13 MAY 26 on December 30, 2024 and sell it today you would lose (220.00) from holding SCHW 5095707 13 MAY 26 or give up 2.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.06%
Values	Daily Returns

Algoma Steel Group  vs.  SCHW 5095707 13 MAY 26

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.

SCHW 5095707 13

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCHW 5095707 13 MAY 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 808513BQ7 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Algoma Steel and 808513BQ7

The main advantage of trading using opposite Algoma Steel and 808513BQ7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, 808513BQ7 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 808513BQ7 will offset losses from the drop in 808513BQ7's long position.

The idea behind Algoma Steel Group and SCHW 5095707 13 MAY 26 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.