Correlation Between BLUESCOPE STEEL and TERADYNE

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

By analyzing existing cross correlation between BLUESCOPE STEEL and TERADYNE, you can compare the effects of market volatilities on BLUESCOPE STEEL and TERADYNE 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 TERADYNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and TERADYNE.

Diversification Opportunities for BLUESCOPE STEEL and TERADYNE

-0.45

Correlation Coefficient

BLUESCOPE STEEL  TERADYNE

Very good diversification

The 3 months correlation between BLUESCOPE and TERADYNE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and TERADYNE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADYNE 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 TERADYNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADYNE has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and TERADYNE go up and down completely randomly.

Pair Corralation between BLUESCOPE STEEL and TERADYNE

Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to under-perform the TERADYNE. In addition to that, BLUESCOPE STEEL is 1.25 times more volatile than TERADYNE. It trades about -0.07 of its total potential returns per unit of risk. TERADYNE is currently generating about 0.29 per unit of volatility. If you would invest  9,523  in TERADYNE on October 6, 2024 and sell it today you would earn a total of  2,611  from holding TERADYNE or generate 27.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

BLUESCOPE STEEL  vs.  TERADYNE

BLUESCOPE STEEL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLUESCOPE STEEL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TERADYNE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TERADYNE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TERADYNE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BLUESCOPE STEEL and TERADYNE

The main advantage of trading using opposite BLUESCOPE STEEL and TERADYNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, TERADYNE 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 TERADYNE will offset losses from the drop in TERADYNE's long position.

The idea behind BLUESCOPE STEEL and TERADYNE 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.