Correlation Between Bluescope Steel and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Catalyst 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 Catalyst 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 Catalyst Metals, you can compare the effects of market volatilities on Bluescope Steel and Catalyst 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 Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Catalyst Metals.
Diversification Opportunities for Bluescope Steel and Catalyst Metals
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Catalyst is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst 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 Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Catalyst Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Catalyst Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.32 times more return on investment than Catalyst Metals. However, Bluescope Steel is 3.14 times less risky than Catalyst Metals. It trades about 0.02 of its potential returns per unit of risk. Catalyst Metals is currently generating about -0.13 per unit of risk. If you would invest 2,119 in Bluescope Steel on August 27, 2024 and sell it today you would earn a total of 6.00 from holding Bluescope Steel or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Catalyst Metals
Performance |
| Timeline |
| Bluescope Steel |
| Catalyst Metals |
Bluescope Steel and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Catalyst Metals
The main advantage of trading using opposite Bluescope Steel and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Catalyst 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.| Bluescope Steel vs. Carnegie Clean Energy | Bluescope Steel vs. Energy Technologies Limited | Bluescope Steel vs. Ras Technology Holdings | Bluescope Steel vs. ACDC Metals |
| Catalyst Metals vs. TPG Telecom | Catalyst Metals vs. Queste Communications | Catalyst Metals vs. Treasury Wine Estates | Catalyst Metals vs. Stelar Metals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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