Correlation Between Bluescope Steel and Santana Minerals

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

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

Diversification Opportunities for Bluescope Steel and Santana Minerals

0.26

Correlation Coefficient

Bluescope Steel  Santana Minerals

Modest diversification

The 3 months correlation between Bluescope and Santana is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Santana Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santana Minerals 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 Santana Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santana Minerals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Santana Minerals go up and down completely randomly.

Pair Corralation between Bluescope Steel and Santana Minerals

Assuming the 90 days trading horizon Bluescope Steel is expected to generate 222.67 times less return on investment than Santana Minerals. But when comparing it to its historical volatility, Bluescope Steel is 2.86 times less risky than Santana Minerals. It trades about 0.0 of its potential returns per unit of risk. Santana Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Santana Minerals on September 23, 2024 and sell it today you would earn a total of  21.00  from holding Santana Minerals or generate 84.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bluescope Steel  vs.  Santana Minerals

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 latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Santana Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bluescope Steel and Santana Minerals

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

The idea behind Bluescope Steel and Santana Minerals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.