Correlation Between Bluescope Steel and Hotel Property
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Hotel Property 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 Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Hotel Property Investments, you can compare the effects of market volatilities on Bluescope Steel and Hotel Property 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 Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Hotel Property.
Diversification Opportunities for Bluescope Steel and Hotel Property
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bluescope and Hotel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves 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 Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Hotel Property go up and down completely randomly.
Pair Corralation between Bluescope Steel and Hotel Property
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 4.0 times more return on investment than Hotel Property. However, Bluescope Steel is 4.0 times more volatile than Hotel Property Investments. It trades about 0.11 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.41 per unit of risk. If you would invest 2,119 in Bluescope Steel on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Bluescope Steel or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Hotel Property Investments
Performance |
| Timeline |
| Bluescope Steel |
| Hotel Property Inves |
Bluescope Steel and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Hotel Property
The main advantage of trading using opposite Bluescope Steel and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Hotel Property 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 Hotel Property will offset losses from the drop in Hotel Property'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 |
| Hotel Property vs. Australian Unity Office | Hotel Property vs. Champion Iron | Hotel Property vs. Ridley | Hotel Property vs. Peel Mining |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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