Correlation Between GREEN PLAINS and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both GREEN PLAINS 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 GREEN PLAINS and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GREEN PLAINS RENEW and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on GREEN PLAINS 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 GREEN PLAINS with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREEN PLAINS and ALGOMA STEEL.
Diversification Opportunities for GREEN PLAINS and ALGOMA STEEL
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between GREEN and ALGOMA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding GREEN PLAINS RENEW 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 GREEN PLAINS 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 GREEN PLAINS RENEW 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 GREEN PLAINS i.e., GREEN PLAINS and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between GREEN PLAINS and ALGOMA STEEL
Assuming the 90 days trading horizon GREEN PLAINS RENEW is expected to under-perform the ALGOMA STEEL. In addition to that, GREEN PLAINS is 1.48 times more volatile than ALGOMA STEEL GROUP. It trades about -0.06 of its total potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about -0.06 per unit of volatility. If you would invest 955.00 in ALGOMA STEEL GROUP on October 9, 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 Against |
Strength | Insignificant |
Accuracy | 94.12% |
Values | Daily Returns |
GREEN PLAINS RENEW vs. ALGOMA STEEL GROUP
Performance |
Timeline |
GREEN PLAINS RENEW |
ALGOMA STEEL GROUP |
GREEN PLAINS and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GREEN PLAINS and ALGOMA STEEL
The main advantage of trading using opposite GREEN PLAINS and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREEN PLAINS 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.GREEN PLAINS vs. Hollywood Bowl Group | GREEN PLAINS vs. REMEDY ENTERTAINMENT OYJ | GREEN PLAINS vs. Hisense Home Appliances | GREEN PLAINS vs. Tencent Music Entertainment |
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Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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