Correlation Between Bluescope Steel and Sandon Capital
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Sandon Capital 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 Sandon Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Sandon Capital Investments, you can compare the effects of market volatilities on Bluescope Steel and Sandon Capital 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 Sandon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Sandon Capital.
Diversification Opportunities for Bluescope Steel and Sandon Capital
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bluescope and Sandon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Sandon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandon Capital Inves 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 Sandon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandon Capital Inves has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Sandon Capital go up and down completely randomly.
Pair Corralation between Bluescope Steel and Sandon Capital
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 2.57 times more return on investment than Sandon Capital. However, Bluescope Steel is 2.57 times more volatile than Sandon Capital Investments. It trades about 0.11 of its potential returns per unit of risk. Sandon Capital Investments is currently generating about 0.06 per unit of risk. If you would invest 2,119 in Bluescope Steel on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Bluescope Steel or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Sandon Capital Investments
Performance |
| Timeline |
| Bluescope Steel |
| Sandon Capital Inves |
Bluescope Steel and Sandon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Sandon Capital
The main advantage of trading using opposite Bluescope Steel and Sandon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Sandon Capital 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 Sandon Capital will offset losses from the drop in Sandon Capital's 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 |
| Sandon Capital vs. Macquarie Technology Group | Sandon Capital vs. Richmond Vanadium Technology | Sandon Capital vs. MFF Capital Investments | Sandon Capital vs. Genetic Technologies |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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