Correlation Between Advanced Braking and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Bluescope 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 Advanced Braking and Bluescope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Bluescope Steel, you can compare the effects of market volatilities on Advanced Braking and Bluescope 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 Advanced Braking with a short position of Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Bluescope Steel.
Diversification Opportunities for Advanced Braking and Bluescope Steel
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advanced and Bluescope is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Bluescope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluescope Steel has no effect on the direction of Advanced Braking i.e., Advanced Braking and Bluescope Steel go up and down completely randomly.
Pair Corralation between Advanced Braking and Bluescope Steel
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 1.49 times more return on investment than Bluescope Steel. However, Advanced Braking is 1.49 times more volatile than Bluescope Steel. It trades about 0.15 of its potential returns per unit of risk. Bluescope Steel is currently generating about 0.03 per unit of risk. If you would invest 5.10 in Advanced Braking Technology on September 1, 2024 and sell it today you would earn a total of 3.00 from holding Advanced Braking Technology or generate 58.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Bluescope Steel
Performance |
| Timeline |
| Advanced Braking Tec |
| Bluescope Steel |
Advanced Braking and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Bluescope Steel
The main advantage of trading using opposite Advanced Braking and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Bluescope 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 Bluescope Steel will offset losses from the drop in Bluescope Steel's long position.| Advanced Braking vs. Encounter Resources | Advanced Braking vs. Tlou Energy | Advanced Braking vs. Southern Cross Gold | Advanced Braking vs. Minbos Resources |
| Bluescope Steel vs. Advanced Braking Technology | Bluescope Steel vs. Queste Communications | Bluescope Steel vs. Singular Health Group | Bluescope Steel vs. Regis Healthcare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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