Correlation Between NeXGold Mining and Algoma Steel

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

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

Diversification Opportunities for NeXGold Mining and Algoma Steel

-0.27

Correlation Coefficient

NeXGold Mining  Algoma Steel

Very good diversification

The 3 months correlation between NeXGold and Algoma is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining 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 NeXGold Mining 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 NeXGold Mining 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 NeXGold Mining i.e., NeXGold Mining and Algoma Steel go up and down completely randomly.

Pair Corralation between NeXGold Mining and Algoma Steel

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to under-perform the Algoma Steel. In addition to that, NeXGold Mining is 1.87 times more volatile than Algoma Steel Group. It trades about -0.01 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.03 per unit of volatility. If you would invest  931.00  in Algoma Steel Group on October 11, 2024 and sell it today you would earn a total of  266.00  from holding Algoma Steel Group or generate 28.57% return on investment over 90 days.

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

NeXGold Mining Corp  vs.  Algoma Steel Group

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NeXGold Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 NeXGold Mining and Algoma Steel

The main advantage of trading using opposite NeXGold Mining and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeXGold Mining 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 NeXGold Mining 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.