Correlation Between Bluescope Steel and Inca Minerals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Inca Minerals 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 Inca Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Inca Minerals, you can compare the effects of market volatilities on Bluescope Steel and Inca Minerals 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 Inca Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Inca Minerals.
Diversification Opportunities for Bluescope Steel and Inca Minerals
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bluescope and Inca is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Inca Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inca Minerals 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 Inca Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inca Minerals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Inca Minerals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Inca Minerals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 4.14 times less return on investment than Inca Minerals. But when comparing it to its historical volatility, Bluescope Steel is 9.77 times less risky than Inca Minerals. It trades about 0.44 of its potential returns per unit of risk. Inca Minerals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.50 in Inca Minerals on November 4, 2024 and sell it today you would earn a total of 0.20 from holding Inca Minerals or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Inca Minerals
Performance |
| Timeline |
| Bluescope Steel |
| Inca Minerals |
Bluescope Steel and Inca Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Inca Minerals
The main advantage of trading using opposite Bluescope Steel and Inca Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Inca Minerals 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 Inca Minerals will offset losses from the drop in Inca Minerals' long position.| Bluescope Steel vs. Platinum Asia Investments | Bluescope Steel vs. M3 Mining | Bluescope Steel vs. Duketon Mining | Bluescope Steel vs. Hotel Property Investments |
| Inca Minerals vs. MA Financial Group | Inca Minerals vs. Queste Communications | Inca Minerals vs. Beam Communications Holdings | Inca Minerals vs. EMvision Medical Devices |
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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