Correlation Between Bluescope Steel and ABACUS STORAGE
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and ABACUS STORAGE 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 ABACUS STORAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and ABACUS STORAGE KING, you can compare the effects of market volatilities on Bluescope Steel and ABACUS STORAGE 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 ABACUS STORAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and ABACUS STORAGE.
Diversification Opportunities for Bluescope Steel and ABACUS STORAGE
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bluescope and ABACUS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and ABACUS STORAGE KING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABACUS STORAGE KING 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 ABACUS STORAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABACUS STORAGE KING has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and ABACUS STORAGE go up and down completely randomly.
Pair Corralation between Bluescope Steel and ABACUS STORAGE
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 70.82 times less return on investment than ABACUS STORAGE. But when comparing it to its historical volatility, Bluescope Steel is 35.46 times less risky than ABACUS STORAGE. It trades about 0.03 of its potential returns per unit of risk. ABACUS STORAGE KING is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 114.00 in ABACUS STORAGE KING on September 3, 2024 and sell it today you would earn a total of 7.00 from holding ABACUS STORAGE KING or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.68% |
| Values | Daily Returns |
Bluescope Steel vs. ABACUS STORAGE KING
Performance |
| Timeline |
| Bluescope Steel |
| ABACUS STORAGE KING |
Bluescope Steel and ABACUS STORAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and ABACUS STORAGE
The main advantage of trading using opposite Bluescope Steel and ABACUS STORAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, ABACUS STORAGE 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 ABACUS STORAGE will offset losses from the drop in ABACUS STORAGE's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Aneka Tambang Tbk |
| ABACUS STORAGE vs. Champion Iron | ABACUS STORAGE vs. iShares Global Healthcare | ABACUS STORAGE vs. Peel Mining | ABACUS STORAGE vs. Australian Dairy Farms |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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