Correlation Between BlueScope Steel and Shenandoah Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications, you can compare the effects of market volatilities on BlueScope Steel and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Shenandoah Telecommunicatio.
Diversification Opportunities for BlueScope Steel and Shenandoah Telecommunicatio
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BlueScope and Shenandoah is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Shenandoah Telecommunicatio go up and down completely randomly.
Pair Corralation between BlueScope Steel and Shenandoah Telecommunicatio
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 0.88 times more return on investment than Shenandoah Telecommunicatio. However, BlueScope Steel Limited is 1.14 times less risky than Shenandoah Telecommunicatio. It trades about 0.24 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.29 per unit of risk. If you would invest 1,160 in BlueScope Steel Limited on November 9, 2024 and sell it today you would earn a total of 100.00 from holding BlueScope Steel Limited or generate 8.62% 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. Shenandoah Telecommunications
Performance |
| Timeline |
| BlueScope Steel |
| Shenandoah Telecommunicatio |
BlueScope Steel and Shenandoah Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Shenandoah Telecommunicatio
The main advantage of trading using opposite BlueScope Steel and Shenandoah Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio will offset losses from the drop in Shenandoah Telecommunicatio's long position.| BlueScope Steel vs. X FAB Silicon Foundries | BlueScope Steel vs. Nanjing Panda Electronics | BlueScope Steel vs. Arrow Electronics | BlueScope Steel vs. Vishay Intertechnology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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