Correlation Between Bluescope Steel and Galena Mining
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Galena Mining 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 Galena Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Galena Mining, you can compare the effects of market volatilities on Bluescope Steel and Galena Mining 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 Galena Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Galena Mining.
Diversification Opportunities for Bluescope Steel and Galena Mining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bluescope and Galena is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Galena Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galena Mining 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 Galena Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galena Mining has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Galena Mining go up and down completely randomly.
Pair Corralation between Bluescope Steel and Galena Mining
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.38 times more return on investment than Galena Mining. However, Bluescope Steel is 2.64 times less risky than Galena Mining. It trades about 0.04 of its potential returns per unit of risk. Galena Mining is currently generating about -0.04 per unit of risk. If you would invest 1,710 in Bluescope Steel on September 4, 2024 and sell it today you would earn a total of 508.00 from holding Bluescope Steel or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bluescope Steel vs. Galena Mining
Performance |
| Timeline |
| Bluescope Steel |
| Galena Mining |
Bluescope Steel and Galena Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Galena Mining
The main advantage of trading using opposite Bluescope Steel and Galena Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Galena Mining 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 Galena Mining will offset losses from the drop in Galena Mining's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. Aneka Tambang Tbk |
| Galena Mining vs. Northern Star Resources | Galena Mining vs. Evolution Mining | Galena Mining vs. Bluescope Steel | Galena Mining vs. Sandfire Resources NL |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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