Correlation Between Bluescope Steel and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Aurelia Metals 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 Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Aurelia Metals, you can compare the effects of market volatilities on Bluescope Steel and Aurelia Metals 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 Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Aurelia Metals.
Diversification Opportunities for Bluescope Steel and Aurelia Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bluescope and Aurelia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals 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 Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Aurelia Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Aurelia Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.67 times more return on investment than Aurelia Metals. However, Bluescope Steel is 1.49 times less risky than Aurelia Metals. It trades about 0.01 of its potential returns per unit of risk. Aurelia Metals is currently generating about -0.05 per unit of risk. If you would invest 2,114 in Bluescope Steel on August 24, 2024 and sell it today you would lose (2.00) from holding Bluescope Steel or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Aurelia Metals
Performance |
| Timeline |
| Bluescope Steel |
| Aurelia Metals |
Bluescope Steel and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Aurelia Metals
The main advantage of trading using opposite Bluescope Steel and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Aneka Tambang Tbk | Bluescope Steel vs. De Grey Mining |
| Aurelia Metals vs. Computershare | Aurelia Metals vs. Richmond Vanadium Technology | Aurelia Metals vs. Ras Technology Holdings | Aurelia Metals vs. Eagle Mountain Mining |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Transaction History View history of all your transactions and understand their impact on performance |