Correlation Between Bluescope Steel and Balkan Mining

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

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

Diversification Opportunities for Bluescope Steel and Balkan Mining

-0.02

Correlation Coefficient

Bluescope Steel  Balkan Mining

Good diversification

The 3 months correlation between Bluescope and Balkan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Balkan Mining and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balkan Mining 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 Balkan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balkan Mining has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Balkan Mining go up and down completely randomly.

Pair Corralation between Bluescope Steel and Balkan Mining

Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.65 times more return on investment than Balkan Mining. However, Bluescope Steel is 1.55 times less risky than Balkan Mining. It trades about 0.13 of its potential returns per unit of risk. Balkan Mining and is currently generating about 0.0 per unit of risk. If you would invest  1,909  in Bluescope Steel on December 24, 2024 and sell it today you would earn a total of  327.00  from holding Bluescope Steel or generate 17.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bluescope Steel  vs.  Balkan Mining and

Bluescope Steel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bluescope Steel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Bluescope Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Balkan Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Balkan Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Balkan Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bluescope Steel and Balkan Mining

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

The idea behind Bluescope Steel and Balkan Mining and 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.