Correlation Between TMST Old and Algoma Steel

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

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

Diversification Opportunities for TMST Old and Algoma Steel

0.37

Correlation Coefficient

TMST Old  Algoma Steel

Weak diversification

The 3 months correlation between TMST and Algoma is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding TMST Old 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 TMST Old 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 TMST Old 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 TMST Old i.e., TMST Old and Algoma Steel go up and down completely randomly.

Pair Corralation between TMST Old and Algoma Steel

Given the investment horizon of 90 days TMST Old is expected to generate 0.53 times more return on investment than Algoma Steel. However, TMST Old is 1.9 times less risky than Algoma Steel. It trades about 0.08 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.04 per unit of risk. If you would invest  1,810  in TMST Old on September 14, 2024 and sell it today you would earn a total of  469.00  from holding TMST Old or generate 25.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.21%
Values	Daily Returns

TMST Old  vs.  Algoma Steel Group

TMST Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TMST Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 latest conflicting performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with TMST Old and Algoma Steel

The main advantage of trading using opposite TMST Old and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMST Old 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 TMST Old 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.