Correlation Between Valens Semiconductor and Algoma Steel

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

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

Diversification Opportunities for Valens Semiconductor and Algoma Steel

0.39

Correlation Coefficient

Valens Semiconductor  Algoma Steel

Weak diversification

The 3 months correlation between Valens and Algoma is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Valens Semiconductor 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 Valens Semiconductor 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 Valens Semiconductor 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 Valens Semiconductor i.e., Valens Semiconductor and Algoma Steel go up and down completely randomly.

Pair Corralation between Valens Semiconductor and Algoma Steel

Assuming the 90 days trading horizon Valens Semiconductor is expected to generate 1.97 times more return on investment than Algoma Steel. However, Valens Semiconductor is 1.97 times more volatile than Algoma Steel Group. It trades about -0.01 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.26 per unit of risk. If you would invest  9.00  in Valens Semiconductor on December 29, 2024 and sell it today you would lose (4.29) from holding Valens Semiconductor or give up 47.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Valens Semiconductor  vs.  Algoma Steel Group

Valens Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valens Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Valens Semiconductor and Algoma Steel

The main advantage of trading using opposite Valens Semiconductor and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens Semiconductor 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 Valens Semiconductor 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..