Correlation Between Caseys General and ALGOMA STEEL

Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caseys General Stores and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and ALGOMA STEEL.

Diversification Opportunities for Caseys General and ALGOMA STEEL

0.59

Correlation Coefficient

Caseys General  ALGOMA STEEL

Very weak diversification

The 3 months correlation between Caseys and ALGOMA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores 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 Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and ALGOMA STEEL go up and down completely randomly.

Pair Corralation between Caseys General and ALGOMA STEEL

Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the ALGOMA STEEL. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 2.02 times less risky than ALGOMA STEEL. The stock trades about -0.15 of its potential returns per unit of risk. The ALGOMA STEEL GROUP is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  955.00  in ALGOMA STEEL GROUP on October 8, 2024 and sell it today you would lose (25.00) from holding ALGOMA STEEL GROUP or give up 2.62% of portfolio value over 90 days.

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

Caseys General Stores  vs.  ALGOMA STEEL GROUP

Caseys General Stores

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALGOMA STEEL GROUP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALGOMA STEEL GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALGOMA STEEL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caseys General and ALGOMA STEEL

The main advantage of trading using opposite Caseys General and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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 Caseys General Stores 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.