Correlation Between Elysee Development and Algoma Central

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

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

Diversification Opportunities for Elysee Development and Algoma Central

0.45

Correlation Coefficient

Elysee Development  Algoma Central

Very weak diversification

The 3 months correlation between Elysee and Algoma is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Elysee Development Corp and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central and Elysee Development 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 Elysee Development Corp 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 Elysee Development i.e., Elysee Development and Algoma Central go up and down completely randomly.

Pair Corralation between Elysee Development and Algoma Central

Assuming the 90 days horizon Elysee Development Corp is expected to generate 0.85 times more return on investment than Algoma Central. However, Elysee Development Corp is 1.17 times less risky than Algoma Central. It trades about 0.21 of its potential returns per unit of risk. Algoma Central is currently generating about 0.06 per unit of risk. If you would invest  23.00  in Elysee Development Corp on May 6, 2025 and sell it today you would earn a total of  6.00  from holding Elysee Development Corp or generate 26.09% return on investment over 90 days.

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

Elysee Development Corp  vs.  Algoma Central

Elysee Development Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elysee Development Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Elysee Development reported solid returns over the last few months and may actually be approaching a breakup point.

Algoma Central

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Algoma Central are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Algoma Central may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Elysee Development and Algoma Central

The main advantage of trading using opposite Elysee Development and Algoma Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elysee Development 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 Elysee Development Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.