Correlation Between WSP Global and Algoma Central

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

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

Diversification Opportunities for WSP Global and Algoma Central

0.82

Correlation Coefficient

WSP Global  Algoma Central

Very poor diversification

The 3 months correlation between WSP and Algoma is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central and WSP Global 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 WSP Global are associated (or correlated) with Algoma Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Central has no effect on the direction of WSP Global i.e., WSP Global and Algoma Central go up and down completely randomly.

Pair Corralation between WSP Global and Algoma Central

Assuming the 90 days trading horizon WSP Global is expected to generate 1.52 times more return on investment than Algoma Central. However, WSP Global is 1.52 times more volatile than Algoma Central. It trades about 0.23 of its potential returns per unit of risk. Algoma Central is currently generating about 0.2 per unit of risk. If you would invest  24,493  in WSP Global on April 22, 2025 and sell it today you would earn a total of  4,403  from holding WSP Global or generate 17.98% return on investment over 90 days.

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

WSP Global  vs.  Algoma Central

WSP Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WSP Global are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WSP Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Algoma Central

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Algoma Central are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Algoma Central may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with WSP Global and Algoma Central

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

The idea behind WSP Global and Algoma Central 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..