Correlation Between BlueScope Steel and Universal Display
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Universal Display 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 Universal Display 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 Universal Display, you can compare the effects of market volatilities on BlueScope Steel and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Universal Display.
Diversification Opportunities for BlueScope Steel and Universal Display
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BlueScope and Universal is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Universal Display go up and down completely randomly.
Pair Corralation between BlueScope Steel and Universal Display
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 1.0 times more return on investment than Universal Display. However, BlueScope Steel Limited is 1.0 times less risky than Universal Display. It trades about 0.06 of its potential returns per unit of risk. Universal Display is currently generating about -0.2 per unit of risk. If you would invest 1,270 in BlueScope Steel Limited on August 30, 2024 and sell it today you would earn a total of 40.00 from holding BlueScope Steel Limited or generate 3.15% 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. Universal Display
Performance |
| Timeline |
| BlueScope Steel |
| Universal Display |
BlueScope Steel and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Universal Display
The main advantage of trading using opposite BlueScope Steel and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| BlueScope Steel vs. AM EAGLE OUTFITTERS | BlueScope Steel vs. International Game Technology | BlueScope Steel vs. Apollo Investment Corp | BlueScope Steel vs. Penn National Gaming |
| Universal Display vs. TROPHY GAMES DEV | Universal Display vs. Penn National Gaming | Universal Display vs. CVW CLEANTECH INC | Universal Display vs. GAMESTOP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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