Correlation Between BLUESCOPE STEEL and MIRAMAR HOTEL
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL and MIRAMAR HOTEL 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 MIRAMAR HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and MIRAMAR HOTEL INV, you can compare the effects of market volatilities on BLUESCOPE STEEL and MIRAMAR HOTEL 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 MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and MIRAMAR HOTEL.
Diversification Opportunities for BLUESCOPE STEEL and MIRAMAR HOTEL
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BLUESCOPE and MIRAMAR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and MIRAMAR HOTEL INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRAMAR HOTEL INV 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 MIRAMAR HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRAMAR HOTEL INV has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and MIRAMAR HOTEL go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and MIRAMAR HOTEL
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 5.2 times more return on investment than MIRAMAR HOTEL. However, BLUESCOPE STEEL is 5.2 times more volatile than MIRAMAR HOTEL INV. It trades about 0.17 of its potential returns per unit of risk. MIRAMAR HOTEL INV is currently generating about 0.07 per unit of risk. If you would invest 1,220 in BLUESCOPE STEEL on September 2, 2024 and sell it today you would earn a total of 130.00 from holding BLUESCOPE STEEL or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. MIRAMAR HOTEL INV
Performance |
| Timeline |
| BLUESCOPE STEEL |
| MIRAMAR HOTEL INV |
BLUESCOPE STEEL and MIRAMAR HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and MIRAMAR HOTEL
The main advantage of trading using opposite BLUESCOPE STEEL and MIRAMAR HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, MIRAMAR HOTEL 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 MIRAMAR HOTEL will offset losses from the drop in MIRAMAR HOTEL's long position.| BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc |
| MIRAMAR HOTEL vs. CECO ENVIRONMENTAL | MIRAMAR HOTEL vs. GigaMedia | MIRAMAR HOTEL vs. LEGACY IRON ORE | MIRAMAR HOTEL vs. BLUESCOPE STEEL |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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