Correlation Between Bluescope Steel and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Southern Cross 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 Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Southern Cross Gold, you can compare the effects of market volatilities on Bluescope Steel and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Southern Cross.
Diversification Opportunities for Bluescope Steel and Southern Cross
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bluescope and Southern is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Southern Cross go up and down completely randomly.
Pair Corralation between Bluescope Steel and Southern Cross
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.47 times more return on investment than Southern Cross. However, Bluescope Steel is 2.15 times less risky than Southern Cross. It trades about 0.16 of its potential returns per unit of risk. Southern Cross Gold is currently generating about -0.02 per unit of risk. If you would invest 2,031 in Bluescope Steel on September 1, 2024 and sell it today you would earn a total of 182.00 from holding Bluescope Steel or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Southern Cross Gold
Performance |
| Timeline |
| Bluescope Steel |
| Southern Cross Gold |
Bluescope Steel and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Southern Cross
The main advantage of trading using opposite Bluescope Steel and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Bluescope Steel vs. Advanced Braking Technology | Bluescope Steel vs. Queste Communications | Bluescope Steel vs. Singular Health Group | Bluescope Steel vs. Regis Healthcare |
| Southern Cross vs. Northern Star Resources | Southern Cross vs. Evolution Mining | Southern Cross vs. Bluescope Steel | Southern Cross 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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