Correlation Between FSA and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both FSA 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 FSA and Bluescope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and Bluescope Steel, you can compare the effects of market volatilities on FSA 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 FSA with a short position of Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and Bluescope Steel.
Diversification Opportunities for FSA and Bluescope Steel
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSA and Bluescope is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel and FSA 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 FSA 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 FSA i.e., FSA and Bluescope Steel go up and down completely randomly.
Pair Corralation between FSA and Bluescope Steel
Assuming the 90 days trading horizon FSA is expected to generate 26.54 times less return on investment than Bluescope Steel. But when comparing it to its historical volatility, FSA Group is 1.12 times less risky than Bluescope Steel. It trades about 0.0 of its potential returns per unit of risk. Bluescope Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,892 in Bluescope Steel on December 1, 2024 and sell it today you would earn a total of 534.00 from holding Bluescope Steel or generate 28.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FSA Group vs. Bluescope Steel
Performance |
| Timeline |
| FSA Group |
| Bluescope Steel |
FSA and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and Bluescope Steel
The main advantage of trading using opposite FSA and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA 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.| FSA vs. MetalsGrove Mining | FSA vs. Duxton Broadacre Farms | FSA vs. Beston Global Food | FSA vs. Truscott Mining Corp |
| Bluescope Steel vs. TPG Telecom | Bluescope Steel vs. Sayona Mining | Bluescope Steel vs. Aspire Mining | Bluescope Steel vs. Queste Communications |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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