Correlation Between Bluescope Steel and Albion Resources
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Albion 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 Albion 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 Albion Resources Limited, you can compare the effects of market volatilities on Bluescope Steel and Albion 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 Albion Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Albion Resources.
Diversification Opportunities for Bluescope Steel and Albion Resources
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bluescope and Albion is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Albion Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion 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 Albion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Resources has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Albion Resources go up and down completely randomly.
Pair Corralation between Bluescope Steel and Albion Resources
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.69 times more return on investment than Albion Resources. However, Bluescope Steel is 1.44 times less risky than Albion Resources. It trades about 0.11 of its potential returns per unit of risk. Albion Resources Limited is currently generating about 0.06 per unit of risk. If you would invest 1,957 in Bluescope Steel on September 12, 2024 and sell it today you would earn a total of 259.00 from holding Bluescope Steel or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Bluescope Steel vs. Albion Resources Limited
Performance |
| Timeline |
| Bluescope Steel |
| Albion Resources |
Bluescope Steel and Albion Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Albion Resources
The main advantage of trading using opposite Bluescope Steel and Albion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Albion 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 Albion Resources will offset losses from the drop in Albion Resources' long position.| Bluescope Steel vs. Truscott Mining Corp | Bluescope Steel vs. Centaurus Metals | Bluescope Steel vs. Carnegie Clean Energy | Bluescope Steel vs. Falcon Metals |
| Albion Resources vs. Energy Technologies Limited | Albion Resources vs. Hansen Technologies | Albion Resources vs. Mach7 Technologies | Albion Resources vs. Seven West Media |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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