Correlation Between Bluescope Steel and Balkan Mining
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Balkan Mining 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 Balkan Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Balkan Mining and, you can compare the effects of market volatilities on Bluescope Steel and Balkan Mining 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 Balkan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Balkan Mining.
Diversification Opportunities for Bluescope Steel and Balkan Mining
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Balkan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Balkan Mining and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balkan Mining 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 Balkan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balkan Mining has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Balkan Mining go up and down completely randomly.
Pair Corralation between Bluescope Steel and Balkan Mining
Assuming the 90 days trading horizon Bluescope Steel is expected to under-perform the Balkan Mining. But the stock apears to be less risky and, when comparing its historical volatility, Bluescope Steel is 2.44 times less risky than Balkan Mining. The stock trades about -0.14 of its potential returns per unit of risk. The Balkan Mining and is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 5.20 in Balkan Mining and on October 15, 2024 and sell it today you would lose (0.10) from holding Balkan Mining and or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Balkan Mining and
Performance |
| Timeline |
| Bluescope Steel |
| Balkan Mining |
Bluescope Steel and Balkan Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Balkan Mining
The main advantage of trading using opposite Bluescope Steel and Balkan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Balkan Mining 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 Balkan Mining will offset losses from the drop in Balkan Mining's long position.| Bluescope Steel vs. Bank of Queensland | Bluescope Steel vs. Qbe Insurance Group | Bluescope Steel vs. Macquarie Bank Limited | Bluescope Steel vs. Computershare |
| Balkan Mining vs. Data3 | Balkan Mining vs. Black Rock Mining | Balkan Mining vs. G8 Education | Balkan Mining vs. Kip McGrath Education |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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