Correlation Between BlueScope Steel and DSV Panalpina

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Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and DSV Panalpina 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 DSV Panalpina 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 DSV Panalpina AS, you can compare the effects of market volatilities on BlueScope Steel and DSV Panalpina 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 DSV Panalpina. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and DSV Panalpina.

Diversification Opportunities for BlueScope Steel and DSV Panalpina

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BlueScope and DSV is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and DSV Panalpina go up and down completely randomly.

Pair Corralation between BlueScope Steel and DSV Panalpina

Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 2.03 times more return on investment than DSV Panalpina. However, BlueScope Steel is 2.03 times more volatile than DSV Panalpina AS. It trades about 0.01 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.01 per unit of risk. If you would invest  1,340  in BlueScope Steel Limited on September 13, 2024 and sell it today you would earn a total of  0.00  from holding BlueScope Steel Limited or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy97.73%
ValuesDaily Returns

BlueScope Steel Limited  vs.  DSV Panalpina AS

 Performance 
       Timeline  
BlueScope Steel 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in BlueScope Steel Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BlueScope Steel may actually be approaching a critical reversion point that can send shares even higher in January 2025.
DSV Panalpina AS 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DSV Panalpina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BlueScope Steel and DSV Panalpina Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BlueScope Steel and DSV Panalpina

The main advantage of trading using opposite BlueScope Steel and DSV Panalpina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, DSV Panalpina 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 DSV Panalpina will offset losses from the drop in DSV Panalpina's long position.
The idea behind BlueScope Steel Limited and DSV Panalpina AS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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