Correlation Between DAmico International and Algoma Central

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

By analyzing existing cross correlation between dAmico International Shipping and Algoma Central, you can compare the effects of market volatilities on DAmico International and Algoma Central 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 DAmico International with a short position of Algoma Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAmico International and Algoma Central.

Diversification Opportunities for DAmico International and Algoma Central

0.35

Correlation Coefficient

DAmico International  Algoma Central

Weak diversification

The 3 months correlation between DAmico and Algoma is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding dAmico International Shipping and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central and DAmico International 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 dAmico International Shipping are associated (or correlated) with Algoma Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Central has no effect on the direction of DAmico International i.e., DAmico International and Algoma Central go up and down completely randomly.

Pair Corralation between DAmico International and Algoma Central

Assuming the 90 days horizon dAmico International Shipping is expected to under-perform the Algoma Central. In addition to that, DAmico International is 1.79 times more volatile than Algoma Central. It trades about -0.16 of its total potential returns per unit of risk. Algoma Central is currently generating about -0.06 per unit of volatility. If you would invest  1,077  in Algoma Central on October 12, 2024 and sell it today you would lose (54.00) from holding Algoma Central or give up 5.01% of portfolio value over 90 days.

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

dAmico International Shipping  vs.  Algoma Central

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Algoma Central

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Algoma Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Algoma Central is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DAmico International and Algoma Central

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

The idea behind dAmico International Shipping and Algoma Central 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.