Correlation Between Aloro Mining and Algoma Steel

Can any of the company-specific risk be diversified away by investing in both Aloro 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 Aloro 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 Aloro Mining Corp and Algoma Steel Group, you can compare the effects of market volatilities on Aloro 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 Aloro Mining with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aloro Mining and Algoma Steel.

Diversification Opportunities for Aloro Mining and Algoma Steel

-0.49

Correlation Coefficient

Aloro Mining  Algoma Steel

Very good diversification

The 3 months correlation between Aloro and Algoma is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aloro 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 Aloro 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 Aloro 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 Aloro Mining i.e., Aloro Mining and Algoma Steel go up and down completely randomly.

Pair Corralation between Aloro Mining and Algoma Steel

Assuming the 90 days trading horizon Aloro Mining Corp is expected to under-perform the Algoma Steel. In addition to that, Aloro Mining is 2.81 times more volatile than Algoma Steel Group. It trades about -0.13 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.02 per unit of volatility. If you would invest  998.00  in Algoma Steel Group on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Algoma Steel Group or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Aloro Mining Corp  vs.  Algoma Steel Group

Aloro Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aloro Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Algoma Steel Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Algoma Steel Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Aloro Mining and Algoma Steel

The main advantage of trading using opposite Aloro Mining and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aloro 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 Aloro 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.