Correlation Between Bluescope Steel and Ora Banda
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Ora Banda 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 Ora Banda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Ora Banda Mining, you can compare the effects of market volatilities on Bluescope Steel and Ora Banda 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 Ora Banda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Ora Banda.
Diversification Opportunities for Bluescope Steel and Ora Banda
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bluescope and Ora is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Ora Banda Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ora Banda 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 Ora Banda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ora Banda Mining has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Ora Banda go up and down completely randomly.
Pair Corralation between Bluescope Steel and Ora Banda
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 15.63 times less return on investment than Ora Banda. But when comparing it to its historical volatility, Bluescope Steel is 2.45 times less risky than Ora Banda. It trades about 0.03 of its potential returns per unit of risk. Ora Banda Mining is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Ora Banda Mining on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Ora Banda Mining or generate 121.21% 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. Ora Banda Mining
Performance |
| Timeline |
| Bluescope Steel |
| Ora Banda Mining |
Bluescope Steel and Ora Banda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Ora Banda
The main advantage of trading using opposite Bluescope Steel and Ora Banda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Ora Banda 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 Ora Banda will offset losses from the drop in Ora Banda's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. De Grey Mining |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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