Correlation Between Bluescope Steel and Raiden Resources
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Raiden Resources 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 Raiden Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Raiden Resources, you can compare the effects of market volatilities on Bluescope Steel and Raiden Resources 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 Raiden Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Raiden Resources.
Diversification Opportunities for Bluescope Steel and Raiden Resources
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bluescope and Raiden is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Raiden Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiden Resources 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 Raiden Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiden Resources has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Raiden Resources go up and down completely randomly.
Pair Corralation between Bluescope Steel and Raiden Resources
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.25 times more return on investment than Raiden Resources. However, Bluescope Steel is 4.0 times less risky than Raiden Resources. It trades about 0.03 of its potential returns per unit of risk. Raiden Resources is currently generating about -0.02 per unit of risk. If you would invest 2,055 in Bluescope Steel on September 2, 2024 and sell it today you would earn a total of 158.00 from holding Bluescope Steel or generate 7.69% 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. Raiden Resources
Performance |
| Timeline |
| Bluescope Steel |
| Raiden Resources |
Bluescope Steel and Raiden Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Raiden Resources
The main advantage of trading using opposite Bluescope Steel and Raiden Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Raiden Resources 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 Raiden Resources will offset losses from the drop in Raiden Resources' long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. Aneka Tambang Tbk |
| Raiden Resources vs. Perseus Mining | Raiden Resources vs. Air New Zealand | Raiden Resources vs. The Environmental Group | Raiden Resources vs. Mayfield Childcare |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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