Correlation Between Gol Intelligent and ALGOMA STEEL

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Can any of the company-specific risk be diversified away by investing in both Gol Intelligent 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 Gol Intelligent and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gol Intelligent Airlines and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Gol Intelligent 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 Gol Intelligent with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Intelligent and ALGOMA STEEL.

Diversification Opportunities for Gol Intelligent and ALGOMA STEEL

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Gol and ALGOMA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines 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 Gol Intelligent 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 Gol Intelligent Airlines 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 Gol Intelligent i.e., Gol Intelligent and ALGOMA STEEL go up and down completely randomly.

Pair Corralation between Gol Intelligent and ALGOMA STEEL

If you would invest  648.00  in ALGOMA STEEL GROUP on September 19, 2024 and sell it today you would earn a total of  262.00  from holding ALGOMA STEEL GROUP or generate 40.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gol Intelligent Airlines  vs.  ALGOMA STEEL GROUP

 Performance 
       Timeline  
Gol Intelligent Airlines 

Risk-Adjusted Performance

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Over the last 90 days Gol Intelligent Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gol Intelligent is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
ALGOMA STEEL GROUP 

Risk-Adjusted Performance

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Weak
 
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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.

Gol Intelligent and ALGOMA STEEL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gol Intelligent and ALGOMA STEEL

The main advantage of trading using opposite Gol Intelligent and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Intelligent 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 Gol Intelligent Airlines 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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