Correlation Between Bluescope Steel and Hawsons Iron
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Hawsons Iron 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 Hawsons Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Hawsons Iron, you can compare the effects of market volatilities on Bluescope Steel and Hawsons Iron 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 Hawsons Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Hawsons Iron.
Diversification Opportunities for Bluescope Steel and Hawsons Iron
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Hawsons is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Hawsons Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawsons Iron 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 Hawsons Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawsons Iron has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Hawsons Iron go up and down completely randomly.
Pair Corralation between Bluescope Steel and Hawsons Iron
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.35 times more return on investment than Hawsons Iron. However, Bluescope Steel is 2.82 times less risky than Hawsons Iron. It trades about 0.02 of its potential returns per unit of risk. Hawsons Iron is currently generating about -0.07 per unit of risk. If you would invest 2,060 in Bluescope Steel on November 2, 2024 and sell it today you would earn a total of 38.00 from holding Bluescope Steel or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
Bluescope Steel vs. Hawsons Iron
Performance |
| Timeline |
| Bluescope Steel |
| Hawsons Iron |
Bluescope Steel and Hawsons Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Hawsons Iron
The main advantage of trading using opposite Bluescope Steel and Hawsons Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Hawsons Iron 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 Hawsons Iron will offset losses from the drop in Hawsons Iron'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 |
| Hawsons Iron vs. Medical Developments International | Hawsons Iron vs. Truscott Mining Corp | Hawsons Iron vs. Group 6 Metals | Hawsons Iron vs. Carawine Resources Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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