Correlation Between Carlin Gold and Algoma Steel

Can any of the company-specific risk be diversified away by investing in both Carlin Gold and Algoma Steel 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 Carlin Gold and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlin Gold and Algoma Steel Group, you can compare the effects of market volatilities on Carlin Gold and Algoma Steel 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 Carlin Gold with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlin Gold and Algoma Steel.

Diversification Opportunities for Carlin Gold and Algoma Steel

-0.63

Correlation Coefficient

Carlin Gold  Algoma Steel

Excellent diversification

The 3 months correlation between Carlin and Algoma is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carlin Gold and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Carlin Gold 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 Carlin Gold are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Carlin Gold i.e., Carlin Gold and Algoma Steel go up and down completely randomly.

Pair Corralation between Carlin Gold and Algoma Steel

Assuming the 90 days horizon Carlin Gold is expected to generate 1.87 times more return on investment than Algoma Steel. However, Carlin Gold is 1.87 times more volatile than Algoma Steel Group. It trades about 0.11 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.23 per unit of risk. If you would invest  15.00  in Carlin Gold on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Carlin Gold or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Carlin Gold  vs.  Algoma Steel Group

Carlin Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlin Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Carlin Gold showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Carlin Gold and Algoma Steel

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

The idea behind Carlin Gold and Algoma Steel Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.