Correlation Between Bluescope Steel and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Farm Pride 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 Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Farm Pride Foods, you can compare the effects of market volatilities on Bluescope Steel and Farm Pride 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 Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Farm Pride.
Diversification Opportunities for Bluescope Steel and Farm Pride
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bluescope and Farm is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods 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 Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Farm Pride go up and down completely randomly.
Pair Corralation between Bluescope Steel and Farm Pride
Assuming the 90 days trading horizon Bluescope Steel is expected to under-perform the Farm Pride. But the stock apears to be less risky and, when comparing its historical volatility, Bluescope Steel is 3.22 times less risky than Farm Pride. The stock trades about -0.01 of its potential returns per unit of risk. The Farm Pride Foods is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Farm Pride Foods on September 14, 2024 and sell it today you would lose (3.00) from holding Farm Pride Foods or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Farm Pride Foods
Performance |
| Timeline |
| Bluescope Steel |
| Farm Pride Foods |
Bluescope Steel and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Farm Pride
The main advantage of trading using opposite Bluescope Steel and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. De Grey Mining |
| Farm Pride vs. Aneka Tambang Tbk | Farm Pride vs. Macquarie Group | Farm Pride vs. Macquarie Group Ltd | Farm Pride vs. Challenger |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |