Correlation Between BlueScope Steel and Ta Chen
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Ta Chen 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 Ta Chen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Ltd and Ta Chen Stainless, you can compare the effects of market volatilities on BlueScope Steel and Ta Chen 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 Ta Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Ta Chen.
Diversification Opportunities for BlueScope Steel and Ta Chen
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BlueScope and 2027 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Ltd and Ta Chen Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Chen Stainless 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 Ltd are associated (or correlated) with Ta Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Chen Stainless has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Ta Chen go up and down completely randomly.
Pair Corralation between BlueScope Steel and Ta Chen
Assuming the 90 days horizon BlueScope Steel Ltd is expected to generate 1.64 times more return on investment than Ta Chen. However, BlueScope Steel is 1.64 times more volatile than Ta Chen Stainless. It trades about 0.0 of its potential returns per unit of risk. Ta Chen Stainless is currently generating about -0.02 per unit of risk. If you would invest 7,390 in BlueScope Steel Ltd on September 3, 2024 and sell it today you would lose (536.00) from holding BlueScope Steel Ltd or give up 7.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.97% |
| Values | Daily Returns |
BlueScope Steel Ltd vs. Ta Chen Stainless
Performance |
| Timeline |
| BlueScope Steel |
| Ta Chen Stainless |
BlueScope Steel and Ta Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Ta Chen
The main advantage of trading using opposite BlueScope Steel and Ta Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Ta Chen 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 Ta Chen will offset losses from the drop in Ta Chen's long position.| BlueScope Steel vs. Ta Chen Stainless | BlueScope Steel vs. Gerdau SA | BlueScope Steel vs. Gerdau SA | BlueScope Steel vs. Nucor Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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