Correlation Between BLUESCOPE STEEL and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL and Aluminumof China 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 Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and Aluminum of, you can compare the effects of market volatilities on BLUESCOPE STEEL and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and Aluminumof China.
Diversification Opportunities for BLUESCOPE STEEL and Aluminumof China
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BLUESCOPE and Aluminumof is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and Aluminumof China go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and Aluminumof China
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 0.54 times more return on investment than Aluminumof China. However, BLUESCOPE STEEL is 1.85 times less risky than Aluminumof China. It trades about 0.01 of its potential returns per unit of risk. Aluminum of is currently generating about -0.03 per unit of risk. If you would invest 1,350 in BLUESCOPE STEEL on September 3, 2024 and sell it today you would earn a total of 0.00 from holding BLUESCOPE STEEL or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. Aluminum of
Performance |
| Timeline |
| BLUESCOPE STEEL |
| Aluminumof China |
BLUESCOPE STEEL and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and Aluminumof China
The main advantage of trading using opposite BLUESCOPE STEEL and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| BLUESCOPE STEEL vs. Chongqing Machinery Electric | BLUESCOPE STEEL vs. BRIT AMER TOBACCO | BLUESCOPE STEEL vs. The Hanover Insurance | BLUESCOPE STEEL vs. INSURANCE AUST GRP |
| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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