Correlation Between Bluescope Steel and Anax Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Anax 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 Anax 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 Anax Metals, you can compare the effects of market volatilities on Bluescope Steel and Anax 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 Anax Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Anax Metals.
Diversification Opportunities for Bluescope Steel and Anax Metals
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bluescope and Anax is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Anax Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anax 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 Anax Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anax Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Anax Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Anax Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.27 times more return on investment than Anax Metals. However, Bluescope Steel is 3.64 times less risky than Anax Metals. It trades about 0.04 of its potential returns per unit of risk. Anax Metals is currently generating about -0.03 per unit of risk. If you would invest 1,730 in Bluescope Steel on August 30, 2024 and sell it today you would earn a total of 446.00 from holding Bluescope Steel or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Anax Metals
Performance |
| Timeline |
| Bluescope Steel |
| Anax Metals |
Bluescope Steel and Anax Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Anax Metals
The main advantage of trading using opposite Bluescope Steel and Anax Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Anax 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 Anax Metals will offset losses from the drop in Anax Metals' 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 |
| Anax Metals vs. BlackWall Property Funds | Anax Metals vs. Carlton Investments | Anax Metals vs. Aeris Environmental | Anax Metals vs. Lendlease 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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