Correlation Between BlueScope Steel and AUCKLAND INTL
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and AUCKLAND INTL 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 AUCKLAND INTL 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 AUCKLAND INTL AIRPORT, you can compare the effects of market volatilities on BlueScope Steel and AUCKLAND INTL 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 AUCKLAND INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and AUCKLAND INTL.
Diversification Opportunities for BlueScope Steel and AUCKLAND INTL
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BlueScope and AUCKLAND is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and AUCKLAND INTL AIRPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUCKLAND INTL AIRPORT 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 AUCKLAND INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUCKLAND INTL AIRPORT has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and AUCKLAND INTL go up and down completely randomly.
Pair Corralation between BlueScope Steel and AUCKLAND INTL
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 1.47 times more return on investment than AUCKLAND INTL. However, BlueScope Steel is 1.47 times more volatile than AUCKLAND INTL AIRPORT. It trades about 0.04 of its potential returns per unit of risk. AUCKLAND INTL AIRPORT is currently generating about 0.0 per unit of risk. If you would invest 973.00 in BlueScope Steel Limited on September 14, 2024 and sell it today you would earn a total of 327.00 from holding BlueScope Steel Limited or generate 33.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BlueScope Steel Limited vs. AUCKLAND INTL AIRPORT
Performance |
| Timeline |
| BlueScope Steel |
| AUCKLAND INTL AIRPORT |
BlueScope Steel and AUCKLAND INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and AUCKLAND INTL
The main advantage of trading using opposite BlueScope Steel and AUCKLAND INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, AUCKLAND INTL 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 AUCKLAND INTL will offset losses from the drop in AUCKLAND INTL's long position.| BlueScope Steel vs. ArcelorMittal | BlueScope Steel vs. NIPPON STEEL SPADR | BlueScope Steel vs. Reliance Steel Aluminum | BlueScope Steel vs. Superior Plus Corp |
| AUCKLAND INTL vs. BlueScope Steel Limited | AUCKLAND INTL vs. United States Steel | AUCKLAND INTL vs. Nippon Steel | AUCKLAND INTL vs. Boiron SA |
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 Directory module to find actively traded commodities issued by global exchanges.
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