Correlation Between Bluescope Steel and Cosmo Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Cosmo 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 Cosmo 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 Cosmo Metals, you can compare the effects of market volatilities on Bluescope Steel and Cosmo 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 Cosmo Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Cosmo Metals.
Diversification Opportunities for Bluescope Steel and Cosmo Metals
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bluescope and Cosmo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Cosmo Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmo 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 Cosmo Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmo Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Cosmo Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Cosmo Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.3 times more return on investment than Cosmo Metals. However, Bluescope Steel is 3.34 times less risky than Cosmo Metals. It trades about 0.02 of its potential returns per unit of risk. Cosmo Metals is currently generating about -0.05 per unit of risk. If you would invest 1,782 in Bluescope Steel on October 11, 2024 and sell it today you would earn a total of 150.00 from holding Bluescope Steel or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Cosmo Metals
Performance |
| Timeline |
| Bluescope Steel |
| Cosmo Metals |
Bluescope Steel and Cosmo Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Cosmo Metals
The main advantage of trading using opposite Bluescope Steel and Cosmo Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Cosmo 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 Cosmo Metals will offset losses from the drop in Cosmo Metals' long position.| Bluescope Steel vs. Centuria Industrial Reit | Bluescope Steel vs. Ora Banda Mining | Bluescope Steel vs. MetalsGrove Mining | Bluescope Steel vs. Dalaroo Metals |
| Cosmo Metals vs. Northern Star Resources | Cosmo Metals vs. Evolution Mining | Cosmo Metals vs. Bluescope Steel | Cosmo Metals vs. De Grey 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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