Correlation Between Bisalloy Steel and Harvey Norman
Can any of the company-specific risk be diversified away by investing in both Bisalloy Steel and Harvey Norman 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 Bisalloy Steel and Harvey Norman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bisalloy Steel Group and Harvey Norman Holdings, you can compare the effects of market volatilities on Bisalloy Steel and Harvey Norman 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 Bisalloy Steel with a short position of Harvey Norman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bisalloy Steel and Harvey Norman.
Diversification Opportunities for Bisalloy Steel and Harvey Norman
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bisalloy and Harvey is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bisalloy Steel Group and Harvey Norman Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvey Norman Holdings and Bisalloy 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 Bisalloy Steel Group are associated (or correlated) with Harvey Norman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvey Norman Holdings has no effect on the direction of Bisalloy Steel i.e., Bisalloy Steel and Harvey Norman go up and down completely randomly.
Pair Corralation between Bisalloy Steel and Harvey Norman
Assuming the 90 days trading horizon Bisalloy Steel Group is expected to generate 2.11 times more return on investment than Harvey Norman. However, Bisalloy Steel is 2.11 times more volatile than Harvey Norman Holdings. It trades about 0.07 of its potential returns per unit of risk. Harvey Norman Holdings is currently generating about 0.04 per unit of risk. If you would invest 187.00 in Bisalloy Steel Group on September 12, 2024 and sell it today you would earn a total of 253.00 from holding Bisalloy Steel Group or generate 135.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bisalloy Steel Group vs. Harvey Norman Holdings
Performance |
| Timeline |
| Bisalloy Steel Group |
| Harvey Norman Holdings |
Bisalloy Steel and Harvey Norman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bisalloy Steel and Harvey Norman
The main advantage of trading using opposite Bisalloy Steel and Harvey Norman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bisalloy Steel position performs unexpectedly, Harvey Norman 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 Harvey Norman will offset losses from the drop in Harvey Norman's long position.| Bisalloy Steel vs. Australian Unity Office | Bisalloy Steel vs. EROAD | Bisalloy Steel vs. Stelar Metals | Bisalloy Steel vs. Home Consortium |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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