Correlation Between Bluescope Steel and Dicker Data
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Dicker Data 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 Dicker Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Dicker Data, you can compare the effects of market volatilities on Bluescope Steel and Dicker Data 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 Dicker Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Dicker Data.
Diversification Opportunities for Bluescope Steel and Dicker Data
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Dicker is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Dicker Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicker Data 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 Dicker Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicker Data has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Dicker Data go up and down completely randomly.
Pair Corralation between Bluescope Steel and Dicker Data
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 1.39 times more return on investment than Dicker Data. However, Bluescope Steel is 1.39 times more volatile than Dicker Data. It trades about 0.44 of its potential returns per unit of risk. Dicker Data is currently generating about 0.09 per unit of risk. If you would invest 1,900 in Bluescope Steel on November 4, 2024 and sell it today you would earn a total of 229.00 from holding Bluescope Steel or generate 12.05% 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. Dicker Data
Performance |
| Timeline |
| Bluescope Steel |
| Dicker Data |
Bluescope Steel and Dicker Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Dicker Data
The main advantage of trading using opposite Bluescope Steel and Dicker Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Dicker Data 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 Dicker Data will offset losses from the drop in Dicker Data's long position.| Bluescope Steel vs. Vulcan Steel | Bluescope Steel vs. Red Hill Iron | Bluescope Steel vs. Phoslock Environmental Technologies | Bluescope Steel vs. Perseus Mining |
| Dicker Data vs. Dexus Convenience Retail | Dicker Data vs. Super Retail Group | Dicker Data vs. Charter Hall Retail | Dicker Data vs. Centrex 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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