Correlation Between Aperam PK and BlueScope Steel

Can any of the company-specific risk be diversified away by investing in both Aperam PK 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 Aperam PK and BlueScope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aperam PK and BlueScope Steel Ltd, you can compare the effects of market volatilities on Aperam PK 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 Aperam PK with a short position of BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aperam PK and BlueScope Steel.

Diversification Opportunities for Aperam PK and BlueScope Steel

0.36

Correlation Coefficient

Aperam PK  BlueScope Steel

Weak diversification

The 3 months correlation between Aperam and BlueScope is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK and BlueScope Steel Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Aperam PK 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 Aperam PK 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 Aperam PK i.e., Aperam PK and BlueScope Steel go up and down completely randomly.

Pair Corralation between Aperam PK and BlueScope Steel

Assuming the 90 days horizon Aperam PK is expected to under-perform the BlueScope Steel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aperam PK is 1.09 times less risky than BlueScope Steel. The pink sheet trades about -0.19 of its potential returns per unit of risk. The BlueScope Steel Ltd is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  6,854  in BlueScope Steel Ltd on September 28, 2024 and sell it today you would lose (686.00) from holding BlueScope Steel Ltd or give up 10.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Aperam PK  vs.  BlueScope Steel Ltd

Aperam PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperam PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BlueScope Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlueScope Steel Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BlueScope Steel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aperam PK and BlueScope Steel

The main advantage of trading using opposite Aperam PK and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aperam PK 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.

The idea behind Aperam PK and BlueScope Steel Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.