Correlation Between Bluescope Steel and Cleanaway Waste
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Cleanaway Waste 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 Cleanaway Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Cleanaway Waste Management, you can compare the effects of market volatilities on Bluescope Steel and Cleanaway Waste 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 Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Cleanaway Waste.
Diversification Opportunities for Bluescope Steel and Cleanaway Waste
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Cleanaway is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Cleanaway Waste go up and down completely randomly.
Pair Corralation between Bluescope Steel and Cleanaway Waste
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 1.09 times less return on investment than Cleanaway Waste. In addition to that, Bluescope Steel is 1.84 times more volatile than Cleanaway Waste Management. It trades about 0.07 of its total potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.13 per unit of volatility. If you would invest 280.00 in Cleanaway Waste Management on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Cleanaway Waste Management or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bluescope Steel vs. Cleanaway Waste Management
Performance |
| Timeline |
| Bluescope Steel |
| Cleanaway Waste Mana |
Bluescope Steel and Cleanaway Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Cleanaway Waste
The main advantage of trading using opposite Bluescope Steel and Cleanaway Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Cleanaway Waste 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 Cleanaway Waste will offset losses from the drop in Cleanaway Waste's long position.| Bluescope Steel vs. Singular Health Group | Bluescope Steel vs. Hutchison Telecommunications | Bluescope Steel vs. Computershare | Bluescope Steel vs. Ramsay Health Care |
| Cleanaway Waste vs. Hutchison Telecommunications | Cleanaway Waste vs. Bluescope Steel | Cleanaway Waste vs. Aussie Broadband | Cleanaway Waste vs. Aeris Environmental |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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