Correlation Between BLUESCOPE STEEL and Shunfeng International
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL and Shunfeng International 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 Shunfeng International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and Shunfeng International Clean, you can compare the effects of market volatilities on BLUESCOPE STEEL and Shunfeng International 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 Shunfeng International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and Shunfeng International.
Diversification Opportunities for BLUESCOPE STEEL and Shunfeng International
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BLUESCOPE and Shunfeng is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and Shunfeng International Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shunfeng International 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 are associated (or correlated) with Shunfeng International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shunfeng International has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and Shunfeng International go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and Shunfeng International
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 4.07 times less return on investment than Shunfeng International. But when comparing it to its historical volatility, BLUESCOPE STEEL is 8.26 times less risky than Shunfeng International. It trades about 0.22 of its potential returns per unit of risk. Shunfeng International Clean is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.10 in Shunfeng International Clean on December 4, 2024 and sell it today you would earn a total of 0.00 from holding Shunfeng International Clean or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. Shunfeng International Clean
Performance |
| Timeline |
| BLUESCOPE STEEL |
| Shunfeng International |
BLUESCOPE STEEL and Shunfeng International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and Shunfeng International
The main advantage of trading using opposite BLUESCOPE STEEL and Shunfeng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, Shunfeng International 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 Shunfeng International will offset losses from the drop in Shunfeng International's long position.| BLUESCOPE STEEL vs. Merit Medical Systems | BLUESCOPE STEEL vs. PEPTONIC MEDICAL | BLUESCOPE STEEL vs. MEDICAL FACILITIES NEW | BLUESCOPE STEEL vs. CanSino Biologics |
| Shunfeng International vs. Autohome | Shunfeng International vs. Air New Zealand | Shunfeng International vs. 24SEVENOFFICE GROUP AB | Shunfeng International vs. NORWEGIAN AIR SHUT |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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