Correlation Between Bluescope Steel and Pact Group
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Pact Group 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 Pact Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Pact Group Holdings, you can compare the effects of market volatilities on Bluescope Steel and Pact Group 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 Pact Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Pact Group.
Diversification Opportunities for Bluescope Steel and Pact Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bluescope and Pact is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings 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 Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Pact Group go up and down completely randomly.
Pair Corralation between Bluescope Steel and Pact Group
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 2.02 times more return on investment than Pact Group. However, Bluescope Steel is 2.02 times more volatile than Pact Group Holdings. It trades about 0.14 of its potential returns per unit of risk. Pact Group Holdings is currently generating about -0.08 per unit of risk. If you would invest 2,060 in Bluescope Steel on September 3, 2024 and sell it today you would earn a total of 153.00 from holding Bluescope Steel or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Pact Group Holdings
Performance |
| Timeline |
| Bluescope Steel |
| Pact Group Holdings |
Bluescope Steel and Pact Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Pact Group
The main advantage of trading using opposite Bluescope Steel and Pact Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Pact Group 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 Pact Group will offset losses from the drop in Pact Group's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Aneka Tambang Tbk |
| Pact Group vs. Kneomedia | Pact Group vs. COAST ENTERTAINMENT HOLDINGS | Pact Group vs. Treasury Wine Estates | Pact Group vs. Aeon Metals |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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