Correlation Between Bluescope Steel and Alderan Resources
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Alderan Resources 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 Alderan Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Alderan Resources, you can compare the effects of market volatilities on Bluescope Steel and Alderan Resources 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 Alderan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Alderan Resources.
Diversification Opportunities for Bluescope Steel and Alderan Resources
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bluescope and Alderan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Alderan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alderan Resources 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 Alderan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alderan Resources has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Alderan Resources go up and down completely randomly.
Pair Corralation between Bluescope Steel and Alderan Resources
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.24 times more return on investment than Alderan Resources. However, Bluescope Steel is 4.22 times less risky than Alderan Resources. It trades about 0.0 of its potential returns per unit of risk. Alderan Resources is currently generating about -0.03 per unit of risk. If you would invest 2,188 in Bluescope Steel on September 13, 2024 and sell it today you would lose (26.00) from holding Bluescope Steel or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Alderan Resources
Performance |
| Timeline |
| Bluescope Steel |
| Alderan Resources |
Bluescope Steel and Alderan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Alderan Resources
The main advantage of trading using opposite Bluescope Steel and Alderan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Alderan Resources 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 Alderan Resources will offset losses from the drop in Alderan Resources' long position.| Bluescope Steel vs. My Foodie Box | Bluescope Steel vs. Retail Food Group | Bluescope Steel vs. Perseus Mining | Bluescope Steel vs. Autosports Group |
| Alderan Resources vs. Northern Star Resources | Alderan Resources vs. Evolution Mining | Alderan Resources vs. Bluescope Steel | Alderan Resources vs. Sandfire Resources NL |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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