Correlation Between Metallic Minerals and Algoma Steel

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

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

Diversification Opportunities for Metallic Minerals and Algoma Steel

-0.51

Correlation Coefficient

Metallic Minerals  Algoma Steel

Excellent diversification

The 3 months correlation between Metallic and Algoma is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Metallic Minerals Corp 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 Metallic Minerals 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 Metallic Minerals Corp 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 Metallic Minerals i.e., Metallic Minerals and Algoma Steel go up and down completely randomly.

Pair Corralation between Metallic Minerals and Algoma Steel

Assuming the 90 days horizon Metallic Minerals Corp is expected to generate 3.07 times more return on investment than Algoma Steel. However, Metallic Minerals is 3.07 times more volatile than Algoma Steel Group. It trades about -0.03 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.21 per unit of risk. If you would invest  21.00  in Metallic Minerals Corp on December 2, 2024 and sell it today you would lose (2.00) from holding Metallic Minerals Corp or give up 9.52% of portfolio value over 90 days.

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

Metallic Minerals Corp  vs.  Algoma Steel Group

Metallic Minerals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metallic Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Algoma Steel Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Algoma Steel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Metallic Minerals and Algoma Steel

The main advantage of trading using opposite Metallic Minerals and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metallic Minerals 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 Metallic Minerals Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.