Correlation Between Bluescope Steel and Techgen Metals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Techgen Metals 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 Techgen Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Techgen Metals, you can compare the effects of market volatilities on Bluescope Steel and Techgen Metals 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 Techgen Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Techgen Metals.
Diversification Opportunities for Bluescope Steel and Techgen Metals
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bluescope and Techgen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Techgen Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techgen Metals 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 Techgen Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techgen Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Techgen Metals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Techgen Metals
Assuming the 90 days trading horizon Bluescope Steel is expected to under-perform the Techgen Metals. But the stock apears to be less risky and, when comparing its historical volatility, Bluescope Steel is 3.21 times less risky than Techgen Metals. The stock trades about -0.2 of its potential returns per unit of risk. The Techgen Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Techgen Metals on September 22, 2024 and sell it today you would earn a total of 0.30 from holding Techgen Metals or generate 10.0% 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. Techgen Metals
Performance |
| Timeline |
| Bluescope Steel |
| Techgen Metals |
Bluescope Steel and Techgen Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Techgen Metals
The main advantage of trading using opposite Bluescope Steel and Techgen Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Techgen Metals 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 Techgen Metals will offset losses from the drop in Techgen Metals' long position.| Bluescope Steel vs. Strickland Metals | Bluescope Steel vs. Prime Financial Group | Bluescope Steel vs. Auswide Bank | Bluescope Steel vs. National Australia Bank |
| Techgen Metals vs. Northern Star Resources | Techgen Metals vs. Evolution Mining | Techgen Metals vs. Bluescope Steel | Techgen Metals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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