Correlation Between Bluescope Steel and Sims
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Sims 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 Sims into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Sims, you can compare the effects of market volatilities on Bluescope Steel and Sims 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 Sims. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Sims.
Diversification Opportunities for Bluescope Steel and Sims
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Sims is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims 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 Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Sims go up and down completely randomly.
Pair Corralation between Bluescope Steel and Sims
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.63 times more return on investment than Sims. However, Bluescope Steel is 1.59 times less risky than Sims. It trades about 0.43 of its potential returns per unit of risk. Sims is currently generating about 0.24 per unit of risk. If you would invest 1,884 in Bluescope Steel on November 2, 2024 and sell it today you would earn a total of 214.00 from holding Bluescope Steel or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bluescope Steel vs. Sims
Performance |
| Timeline |
| Bluescope Steel |
| Sims |
Bluescope Steel and Sims Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Sims
The main advantage of trading using opposite Bluescope Steel and Sims positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Sims 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 Sims will offset losses from the drop in Sims' long position.| Bluescope Steel vs. Truscott Mining Corp | Bluescope Steel vs. Credit Clear | Bluescope Steel vs. Andean Silver Limited | Bluescope Steel vs. Perpetual Credit Income |
| Sims vs. Pinnacle Investment Management | Sims vs. Sonic Healthcare | Sims vs. Embark Education Group | Sims vs. K2 Asset Management |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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