Correlation Between BlueScope Steel and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and AOYAMA TRADING 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 BlueScope Steel and AOYAMA TRADING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and AOYAMA TRADING, you can compare the effects of market volatilities on BlueScope Steel and AOYAMA TRADING 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 BlueScope Steel with a short position of AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and AOYAMA TRADING.
Diversification Opportunities for BlueScope Steel and AOYAMA TRADING
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BlueScope and AOYAMA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING and BlueScope Steel 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 BlueScope Steel Limited are associated (or correlated) with AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between BlueScope Steel and AOYAMA TRADING
Assuming the 90 days horizon BlueScope Steel is expected to generate 20.66 times less return on investment than AOYAMA TRADING. But when comparing it to its historical volatility, BlueScope Steel Limited is 2.72 times less risky than AOYAMA TRADING. It trades about 0.05 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 780.00 in AOYAMA TRADING on August 28, 2024 and sell it today you would earn a total of 620.00 from holding AOYAMA TRADING or generate 79.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. AOYAMA TRADING
Performance |
| Timeline |
| BlueScope Steel |
| AOYAMA TRADING |
BlueScope Steel and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and AOYAMA TRADING
The main advantage of trading using opposite BlueScope Steel and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.The idea behind BlueScope Steel Limited and AOYAMA TRADING 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.| AOYAMA TRADING vs. Magnachip Semiconductor | AOYAMA TRADING vs. Grupo Carso SAB | AOYAMA TRADING vs. SIEM OFFSHORE NEW | AOYAMA TRADING vs. ELMOS SEMICONDUCTOR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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