Correlation Between Algoma Steel and Carson Development

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

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

Diversification Opportunities for Algoma Steel and Carson Development

0.0

Correlation Coefficient

Algoma Steel  Carson Development

Pay attention - limited upside

The 3 months correlation between Algoma and Carson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Carson Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carson Development and Algoma Steel 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 Algoma Steel Group are associated (or correlated) with Carson Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carson Development has no effect on the direction of Algoma Steel i.e., Algoma Steel and Carson Development go up and down completely randomly.

Pair Corralation between Algoma Steel and Carson Development

If you would invest  604.00  in Algoma Steel Group on September 29, 2024 and sell it today you would earn a total of  378.00  from holding Algoma Steel Group or generate 62.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.21%
Values	Daily Returns

Algoma Steel Group  vs.  Carson Development

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. Despite quite persistent basic indicators, Algoma Steel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Carson Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carson Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Carson Development is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Algoma Steel and Carson Development

The main advantage of trading using opposite Algoma Steel and Carson Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Carson Development 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 Carson Development will offset losses from the drop in Carson Development's long position.

The idea behind Algoma Steel Group and Carson Development 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.