Correlation Between Bluescope Steel and DY6 Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and DY6 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 DY6 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 DY6 Metals, you can compare the effects of market volatilities on Bluescope Steel and DY6 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 DY6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and DY6 Metals.
Diversification Opportunities for Bluescope Steel and DY6 Metals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bluescope and DY6 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and DY6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DY6 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 DY6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DY6 Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and DY6 Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and DY6 Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.56 times more return on investment than DY6 Metals. However, Bluescope Steel is 1.79 times less risky than DY6 Metals. It trades about 0.01 of its potential returns per unit of risk. DY6 Metals is currently generating about -0.22 per unit of risk. If you would invest 2,114 in Bluescope Steel on August 24, 2024 and sell it today you would lose (2.00) from holding Bluescope Steel or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. DY6 Metals
Performance |
| Timeline |
| Bluescope Steel |
| DY6 Metals |
Bluescope Steel and DY6 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and DY6 Metals
The main advantage of trading using opposite Bluescope Steel and DY6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, DY6 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 DY6 Metals will offset losses from the drop in DY6 Metals' long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Aneka Tambang Tbk | Bluescope Steel vs. De Grey Mining |
| DY6 Metals vs. Northern Star Resources | DY6 Metals vs. Evolution Mining | DY6 Metals vs. Bluescope Steel | DY6 Metals vs. Aneka Tambang Tbk |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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