Correlation Between BlueScope Steel and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Elmos Semiconductor 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 Elmos Semiconductor 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 Elmos Semiconductor SE, you can compare the effects of market volatilities on BlueScope Steel and Elmos Semiconductor 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 Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Elmos Semiconductor.
Diversification Opportunities for BlueScope Steel and Elmos Semiconductor
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BlueScope and Elmos is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between BlueScope Steel and Elmos Semiconductor
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 0.7 times more return on investment than Elmos Semiconductor. However, BlueScope Steel Limited is 1.42 times less risky than Elmos Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.01 per unit of risk. If you would invest 1,170 in BlueScope Steel Limited on November 4, 2024 and sell it today you would earn a total of 80.00 from holding BlueScope Steel Limited or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. Elmos Semiconductor SE
Performance |
| Timeline |
| BlueScope Steel |
| Elmos Semiconductor |
BlueScope Steel and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Elmos Semiconductor
The main advantage of trading using opposite BlueScope Steel and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor's long position.| BlueScope Steel vs. FAST RETAIL ADR | BlueScope Steel vs. COMBA TELECOM SYST | BlueScope Steel vs. Indutrade AB | BlueScope Steel vs. Fast Retailing Co |
| Elmos Semiconductor vs. NVIDIA | Elmos Semiconductor vs. NVIDIA | Elmos Semiconductor vs. Taiwan Semiconductor Manufacturing | Elmos Semiconductor vs. Texas Instruments Incorporated |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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