Correlation Between PREMIER FOODS and BLUESCOPE STEEL
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS 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 PREMIER FOODS and BLUESCOPE STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and BLUESCOPE STEEL, you can compare the effects of market volatilities on PREMIER FOODS 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 PREMIER FOODS with a short position of BLUESCOPE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and BLUESCOPE STEEL.
Diversification Opportunities for PREMIER FOODS and BLUESCOPE STEEL
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PREMIER and BLUESCOPE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL and PREMIER FOODS 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 PREMIER FOODS 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 PREMIER FOODS i.e., PREMIER FOODS and BLUESCOPE STEEL go up and down completely randomly.
Pair Corralation between PREMIER FOODS and BLUESCOPE STEEL
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.72 times more return on investment than BLUESCOPE STEEL. However, PREMIER FOODS is 1.4 times less risky than BLUESCOPE STEEL. It trades about 0.1 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about 0.03 per unit of risk. If you would invest 123.00 in PREMIER FOODS on September 3, 2024 and sell it today you would earn a total of 111.00 from holding PREMIER FOODS or generate 90.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. BLUESCOPE STEEL
Performance |
| Timeline |
| PREMIER FOODS |
| BLUESCOPE STEEL |
PREMIER FOODS and BLUESCOPE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and BLUESCOPE STEEL
The main advantage of trading using opposite PREMIER FOODS and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS 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.| PREMIER FOODS vs. USU Software AG | PREMIER FOODS vs. Mitsubishi Materials | PREMIER FOODS vs. Martin Marietta Materials | PREMIER FOODS vs. Check Point Software |
| BLUESCOPE STEEL vs. Chongqing Machinery Electric | BLUESCOPE STEEL vs. BRIT AMER TOBACCO | BLUESCOPE STEEL vs. The Hanover Insurance | BLUESCOPE STEEL vs. INSURANCE AUST GRP |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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