Correlation Between Bluescope Steel and Acrow
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Acrow 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 Acrow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Acrow Limited, you can compare the effects of market volatilities on Bluescope Steel and Acrow 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 Acrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Acrow.
Diversification Opportunities for Bluescope Steel and Acrow
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bluescope and Acrow is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Acrow Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrow Limited 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 Acrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrow Limited has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Acrow go up and down completely randomly.
Pair Corralation between Bluescope Steel and Acrow
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 1.05 times less return on investment than Acrow. But when comparing it to its historical volatility, Bluescope Steel is 1.1 times less risky than Acrow. It trades about 0.04 of its potential returns per unit of risk. Acrow Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Acrow Limited on November 3, 2024 and sell it today you would earn a total of 8.00 from holding Acrow Limited or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Acrow Limited
Performance |
| Timeline |
| Bluescope Steel |
| Acrow Limited |
Bluescope Steel and Acrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Acrow
The main advantage of trading using opposite Bluescope Steel and Acrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Acrow 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 Acrow will offset losses from the drop in Acrow's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. Aneka Tambang Tbk |
| Acrow vs. Hotel Property Investments | Acrow vs. Perpetual Credit Income | Acrow vs. Australian Strategic Materials | Acrow vs. Finexia Financial Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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