Correlation Between Bluescope Steel and Leeuwin Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Leeuwin Metals 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 Leeuwin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Leeuwin Metals, you can compare the effects of market volatilities on Bluescope Steel and Leeuwin Metals 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 Leeuwin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Leeuwin Metals.
Diversification Opportunities for Bluescope Steel and Leeuwin Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bluescope and Leeuwin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Leeuwin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leeuwin Metals 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 Leeuwin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leeuwin Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Leeuwin Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Leeuwin Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.28 times more return on investment than Leeuwin Metals. However, Bluescope Steel is 3.56 times less risky than Leeuwin Metals. It trades about 0.03 of its potential returns per unit of risk. Leeuwin Metals is currently generating about -0.02 per unit of risk. If you would invest 1,725 in Bluescope Steel on August 27, 2024 and sell it today you would earn a total of 398.00 from holding Bluescope Steel or generate 23.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 84.37% |
| Values | Daily Returns |
Bluescope Steel vs. Leeuwin Metals
Performance |
| Timeline |
| Bluescope Steel |
| Leeuwin Metals |
Bluescope Steel and Leeuwin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Leeuwin Metals
The main advantage of trading using opposite Bluescope Steel and Leeuwin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Leeuwin Metals 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 Leeuwin Metals will offset losses from the drop in Leeuwin Metals' long position.| Bluescope Steel vs. Carnegie Clean Energy | Bluescope Steel vs. Energy Technologies Limited | Bluescope Steel vs. Ras Technology Holdings | Bluescope Steel vs. ACDC Metals |
| Leeuwin Metals vs. Northern Star Resources | Leeuwin Metals vs. Evolution Mining | Leeuwin Metals vs. Bluescope Steel | Leeuwin Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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