Correlation Between BlueScope Steel and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on BlueScope Steel and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Quaker Chemical.
Diversification Opportunities for BlueScope Steel and Quaker Chemical
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BlueScope and Quaker is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Quaker Chemical go up and down completely randomly.
Pair Corralation between BlueScope Steel and Quaker Chemical
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 0.92 times more return on investment than Quaker Chemical. However, BlueScope Steel Limited is 1.09 times less risky than Quaker Chemical. It trades about 0.04 of its potential returns per unit of risk. Quaker Chemical is currently generating about 0.01 per unit of risk. If you would invest 964.00 in BlueScope Steel Limited on September 13, 2024 and sell it today you would earn a total of 376.00 from holding BlueScope Steel Limited or generate 39.0% 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. Quaker Chemical
Performance |
| Timeline |
| BlueScope Steel |
| Quaker Chemical |
BlueScope Steel and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Quaker Chemical
The main advantage of trading using opposite BlueScope Steel and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| BlueScope Steel vs. United Insurance Holdings | BlueScope Steel vs. Insurance Australia Group | BlueScope Steel vs. LPKF Laser Electronics | BlueScope Steel vs. Ping An Insurance |
| Quaker Chemical vs. ScanSource | Quaker Chemical vs. BlueScope Steel Limited | Quaker Chemical vs. KRAKATAU STEEL B | Quaker Chemical vs. Khiron Life Sciences |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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