Correlation Between State Bank and ALGOMA STEEL

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

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

Diversification Opportunities for State Bank and ALGOMA STEEL

-0.24

Correlation Coefficient

State Bank  ALGOMA STEEL

Very good diversification

The 3 months correlation between State and ALGOMA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of 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 State Bank 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 State Bank of 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 State Bank i.e., State Bank and ALGOMA STEEL go up and down completely randomly.

Pair Corralation between State Bank and ALGOMA STEEL

Assuming the 90 days horizon State Bank is expected to generate 17.97 times less return on investment than ALGOMA STEEL. But when comparing it to its historical volatility, State Bank of is 2.37 times less risky than ALGOMA STEEL. It trades about 0.02 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

State Bank of  vs.  ALGOMA STEEL GROUP

State Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, State Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 State Bank and ALGOMA STEEL

The main advantage of trading using opposite State Bank and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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 State Bank of 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.

Check out your portfolio center.

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.