Correlation Between Bluescope Steel and Computershare
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Computershare 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 Computershare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Computershare, you can compare the effects of market volatilities on Bluescope Steel and Computershare 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 Computershare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Computershare.
Diversification Opportunities for Bluescope Steel and Computershare
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bluescope and Computershare is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Computershare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Computershare go up and down completely randomly.
Pair Corralation between Bluescope Steel and Computershare
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 3.49 times less return on investment than Computershare. In addition to that, Bluescope Steel is 1.24 times more volatile than Computershare. It trades about 0.03 of its total potential returns per unit of risk. Computershare is currently generating about 0.11 per unit of volatility. If you would invest 2,259 in Computershare on August 25, 2024 and sell it today you would earn a total of 911.00 from holding Computershare or generate 40.33% 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. Computershare
Performance |
| Timeline |
| Bluescope Steel |
| Computershare |
Bluescope Steel and Computershare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Computershare
The main advantage of trading using opposite Bluescope Steel and Computershare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Computershare 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 Computershare will offset losses from the drop in Computershare's 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 |
| Computershare vs. Mayfield Childcare | Computershare vs. Super Retail Group | Computershare vs. Dexus Convenience Retail | Computershare vs. Microequities Asset Management |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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