Correlation Between BLUESCOPE STEEL and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL and Nine Dragons 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 Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and Nine Dragons Paper, you can compare the effects of market volatilities on BLUESCOPE STEEL and Nine Dragons 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 Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and Nine Dragons.
Diversification Opportunities for BLUESCOPE STEEL and Nine Dragons
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BLUESCOPE and Nine is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper 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 Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and Nine Dragons go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and Nine Dragons
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 1.27 times more return on investment than Nine Dragons. However, BLUESCOPE STEEL is 1.27 times more volatile than Nine Dragons Paper. It trades about 0.1 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.09 per unit of risk. If you would invest 1,260 in BLUESCOPE STEEL on August 30, 2024 and sell it today you would earn a total of 80.00 from holding BLUESCOPE STEEL or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. Nine Dragons Paper
Performance |
| Timeline |
| BLUESCOPE STEEL |
| Nine Dragons Paper |
BLUESCOPE STEEL and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and Nine Dragons
The main advantage of trading using opposite BLUESCOPE STEEL and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| BLUESCOPE STEEL vs. Gladstone Investment | BLUESCOPE STEEL vs. PennyMac Mortgage Investment | BLUESCOPE STEEL vs. Carsales | BLUESCOPE STEEL vs. Vastned Retail NV |
| Nine Dragons vs. TFS FINANCIAL | Nine Dragons vs. Webster Financial | Nine Dragons vs. STORE ELECTRONIC | Nine Dragons vs. STMicroelectronics NV |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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