Correlation Between Algoma Steel and TOPTB

Can any of the company-specific risk be diversified away by investing in both Algoma Steel and TOPTB 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 TOPTB 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 TOPTB 5375 20 NOV 48, you can compare the effects of market volatilities on Algoma Steel and TOPTB 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 TOPTB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and TOPTB.

Diversification Opportunities for Algoma Steel and TOPTB

0.53

Correlation Coefficient

Algoma Steel  TOPTB

Very weak diversification

The 3 months correlation between Algoma and TOPTB is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and TOPTB 5375 20 NOV 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPTB 5375 20 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 TOPTB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPTB 5375 20 has no effect on the direction of Algoma Steel i.e., Algoma Steel and TOPTB go up and down completely randomly.

Pair Corralation between Algoma Steel and TOPTB

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the TOPTB. But the stock apears to be less risky and, when comparing its historical volatility, Algoma Steel Group is 2.03 times less risky than TOPTB. The stock trades about -0.09 of its potential returns per unit of risk. The TOPTB 5375 20 NOV 48 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,216  in TOPTB 5375 20 NOV 48 on October 20, 2024 and sell it today you would earn a total of  85.00  from holding TOPTB 5375 20 NOV 48 or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	35.48%
Values	Daily Returns

Algoma Steel Group  vs.  TOPTB 5375 20 NOV 48

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TOPTB 5375 20

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TOPTB 5375 20 NOV 48 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, TOPTB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Algoma Steel and TOPTB

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

The idea behind Algoma Steel Group and TOPTB 5375 20 NOV 48 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.