Correlation Between Boiron SA and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both Boiron SA and BlueScope Steel 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 Boiron SA and BlueScope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boiron SA and BlueScope Steel Limited, you can compare the effects of market volatilities on Boiron SA and BlueScope Steel 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 Boiron SA with a short position of BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boiron SA and BlueScope Steel.
Diversification Opportunities for Boiron SA and BlueScope Steel
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boiron and BlueScope is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Boiron SA 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 Boiron SA are associated (or correlated) with BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of Boiron SA i.e., Boiron SA and BlueScope Steel go up and down completely randomly.
Pair Corralation between Boiron SA and BlueScope Steel
Assuming the 90 days horizon Boiron SA is expected to under-perform the BlueScope Steel. But the stock apears to be less risky and, when comparing its historical volatility, Boiron SA is 1.82 times less risky than BlueScope Steel. The stock trades about -0.47 of its potential returns per unit of risk. The BlueScope Steel Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,280 in BlueScope Steel Limited on August 29, 2024 and sell it today you would earn a total of 30.00 from holding BlueScope Steel Limited or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boiron SA vs. BlueScope Steel Limited
Performance |
| Timeline |
| Boiron SA |
| BlueScope Steel |
Boiron SA and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boiron SA and BlueScope Steel
The main advantage of trading using opposite Boiron SA and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boiron SA position performs unexpectedly, BlueScope Steel 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 BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| Boiron SA vs. Pfizer Inc | Boiron SA vs. Superior Plus Corp | Boiron SA vs. Origin Agritech | Boiron SA vs. Identiv |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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