Correlation Between Bio Gene and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both Bio Gene 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 Bio Gene and Bluescope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Gene Technology and Bluescope Steel, you can compare the effects of market volatilities on Bio Gene 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 Bio Gene with a short position of Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Gene and Bluescope Steel.
Diversification Opportunities for Bio Gene and Bluescope Steel
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bio and Bluescope is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bio Gene Technology and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel and Bio Gene 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 Bio Gene 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 Bio Gene i.e., Bio Gene and Bluescope Steel go up and down completely randomly.
Pair Corralation between Bio Gene and Bluescope Steel
Assuming the 90 days trading horizon Bio Gene Technology is expected to under-perform the Bluescope Steel. In addition to that, Bio Gene is 2.24 times more volatile than Bluescope Steel. It trades about -0.2 of its total potential returns per unit of risk. Bluescope Steel is currently generating about 0.14 per unit of volatility. If you would invest 2,053 in Bluescope Steel on August 31, 2024 and sell it today you would earn a total of 159.00 from holding Bluescope Steel or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Gene Technology vs. Bluescope Steel
Performance |
| Timeline |
| Bio Gene Technology |
| Bluescope Steel |
Bio Gene and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Gene and Bluescope Steel
The main advantage of trading using opposite Bio Gene and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Gene 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.| Bio Gene vs. Northern Star Resources | Bio Gene vs. Evolution Mining | Bio Gene vs. Bluescope Steel | Bio Gene vs. De Grey Mining |
| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. De Grey Mining |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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