Correlation Between BlueScope Steel and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on BlueScope Steel and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Plastic Omnium.
Diversification Opportunities for BlueScope Steel and Plastic Omnium
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BlueScope and Plastic is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Plastic Omnium go up and down completely randomly.
Pair Corralation between BlueScope Steel and Plastic Omnium
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 1.17 times more return on investment than Plastic Omnium. However, BlueScope Steel is 1.17 times more volatile than Plastic Omnium. It trades about 0.04 of its potential returns per unit of risk. Plastic Omnium is currently generating about -0.27 per unit of risk. If you would invest 1,260 in BlueScope Steel Limited on August 25, 2024 and sell it today you would earn a total of 20.00 from holding BlueScope Steel Limited or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. Plastic Omnium
Performance |
| Timeline |
| BlueScope Steel |
| Plastic Omnium |
BlueScope Steel and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Plastic Omnium
The main advantage of trading using opposite BlueScope Steel and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| BlueScope Steel vs. AOYAMA TRADING | BlueScope Steel vs. Virtus Investment Partners | BlueScope Steel vs. Boiron SA | BlueScope Steel vs. ECHO INVESTMENT ZY |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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