Correlation Between Jamieson Wellness and Algoma Steel

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

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

Diversification Opportunities for Jamieson Wellness and Algoma Steel

-0.1

Correlation Coefficient

Jamieson Wellness  Algoma Steel

Good diversification

The 3 months correlation between Jamieson and Algoma is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jamieson Wellness 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 Jamieson Wellness 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 Jamieson Wellness 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 Jamieson Wellness i.e., Jamieson Wellness and Algoma Steel go up and down completely randomly.

Pair Corralation between Jamieson Wellness and Algoma Steel

Assuming the 90 days trading horizon Jamieson Wellness is expected to generate 0.49 times more return on investment than Algoma Steel. However, Jamieson Wellness is 2.05 times less risky than Algoma Steel. It trades about -0.23 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.38 per unit of risk. If you would invest  3,723  in Jamieson Wellness on October 11, 2024 and sell it today you would lose (196.00) from holding Jamieson Wellness or give up 5.26% of portfolio value over 90 days.

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

Jamieson Wellness  vs.  Algoma Steel Group

Jamieson Wellness

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jamieson Wellness are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jamieson Wellness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Algoma Steel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Algoma Steel Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Jamieson Wellness and Algoma Steel

The main advantage of trading using opposite Jamieson Wellness and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jamieson Wellness 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 Jamieson Wellness 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.