Correlation Between CHINA EDUCATION and BLUESCOPE STEEL
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and BLUESCOPE STEEL 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 CHINA EDUCATION and BLUESCOPE STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and BLUESCOPE STEEL, you can compare the effects of market volatilities on CHINA EDUCATION and BLUESCOPE STEEL 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 CHINA EDUCATION with a short position of BLUESCOPE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and BLUESCOPE STEEL.
Diversification Opportunities for CHINA EDUCATION and BLUESCOPE STEEL
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHINA and BLUESCOPE is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with BLUESCOPE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUESCOPE STEEL has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and BLUESCOPE STEEL go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and BLUESCOPE STEEL
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 2.69 times more return on investment than BLUESCOPE STEEL. However, CHINA EDUCATION is 2.69 times more volatile than BLUESCOPE STEEL. It trades about 0.05 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about 0.02 per unit of risk. If you would invest 32.00 in CHINA EDUCATION GROUP on September 14, 2024 and sell it today you would earn a total of 13.00 from holding CHINA EDUCATION GROUP or generate 40.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. BLUESCOPE STEEL
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| BLUESCOPE STEEL |
CHINA EDUCATION and BLUESCOPE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and BLUESCOPE STEEL
The main advantage of trading using opposite CHINA EDUCATION and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, BLUESCOPE STEEL 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 BLUESCOPE STEEL will offset losses from the drop in BLUESCOPE STEEL's long position.| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
| BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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