Correlation Between BlueScope Steel and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on BlueScope Steel and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Jacquet Metal.
Diversification Opportunities for BlueScope Steel and Jacquet Metal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlueScope and Jacquet is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Jacquet Metal go up and down completely randomly.
Pair Corralation between BlueScope Steel and Jacquet Metal
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 2.29 times more return on investment than Jacquet Metal. However, BlueScope Steel is 2.29 times more volatile than Jacquet Metal Service. It trades about 0.18 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.1 per unit of risk. If you would invest 1,220 in BlueScope Steel Limited on September 1, 2024 and sell it today you would earn a total of 140.00 from holding BlueScope Steel Limited or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. Jacquet Metal Service
Performance |
| Timeline |
| BlueScope Steel |
| Jacquet Metal Service |
BlueScope Steel and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Jacquet Metal
The main advantage of trading using opposite BlueScope Steel and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.The idea behind BlueScope Steel Limited and Jacquet Metal Service 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.| Jacquet Metal vs. BORR DRILLING NEW | Jacquet Metal vs. Carsales | Jacquet Metal vs. Gruppo Mutuionline SpA | Jacquet Metal vs. GungHo Online Entertainment |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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