Correlation Between Bluescope Steel and OD6 Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and OD6 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 OD6 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 OD6 Metals, you can compare the effects of market volatilities on Bluescope Steel and OD6 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 OD6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and OD6 Metals.
Diversification Opportunities for Bluescope Steel and OD6 Metals
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bluescope and OD6 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and OD6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OD6 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 OD6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OD6 Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and OD6 Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and OD6 Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.2 times more return on investment than OD6 Metals. However, Bluescope Steel is 5.1 times less risky than OD6 Metals. It trades about 0.03 of its potential returns per unit of risk. OD6 Metals is currently generating about -0.01 per unit of risk. If you would invest 2,130 in Bluescope Steel on September 1, 2024 and sell it today you would earn a total of 83.00 from holding Bluescope Steel or generate 3.9% 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. OD6 Metals
Performance |
| Timeline |
| Bluescope Steel |
| OD6 Metals |
Bluescope Steel and OD6 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and OD6 Metals
The main advantage of trading using opposite Bluescope Steel and OD6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, OD6 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 OD6 Metals will offset losses from the drop in OD6 Metals' long position.| Bluescope Steel vs. Advanced Braking Technology | Bluescope Steel vs. Queste Communications | Bluescope Steel vs. Singular Health Group | Bluescope Steel vs. Regis Healthcare |
| OD6 Metals vs. Northern Star Resources | OD6 Metals vs. Evolution Mining | OD6 Metals vs. Bluescope Steel | OD6 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |