Correlation Between Scotts Miracle and ALGOMA STEEL

Can any of the company-specific risk be diversified away by investing in both Scotts Miracle 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 Scotts Miracle and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Scotts Miracle Gro and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Scotts Miracle 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 Scotts Miracle with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts Miracle and ALGOMA STEEL.

Diversification Opportunities for Scotts Miracle and ALGOMA STEEL

0.58

Correlation Coefficient

Scotts Miracle  ALGOMA STEEL

Very weak diversification

The 3 months correlation between Scotts and ALGOMA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Scotts Miracle Gro 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 Scotts Miracle 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 The Scotts Miracle Gro 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 Scotts Miracle i.e., Scotts Miracle and ALGOMA STEEL go up and down completely randomly.

Pair Corralation between Scotts Miracle and ALGOMA STEEL

Assuming the 90 days trading horizon Scotts Miracle is expected to generate 1.63 times less return on investment than ALGOMA STEEL. But when comparing it to its historical volatility, The Scotts Miracle Gro is 1.58 times less risky than ALGOMA STEEL. It trades about 0.15 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  426.00  in ALGOMA STEEL GROUP on April 24, 2025 and sell it today you would earn a total of  164.00  from holding ALGOMA STEEL GROUP or generate 38.5% return on investment over 90 days.

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

The Scotts Miracle Gro  vs.  ALGOMA STEEL GROUP

Scotts Miracle

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Scotts Miracle Gro are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Scotts Miracle reported solid returns over the last few months and may actually be approaching a breakup point.

ALGOMA STEEL GROUP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALGOMA STEEL GROUP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALGOMA STEEL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scotts Miracle and ALGOMA STEEL

The main advantage of trading using opposite Scotts Miracle and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts Miracle 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 The Scotts Miracle Gro 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.