Correlation Between Gemina Laboratories and BlueScope Steel

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

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

Diversification Opportunities for Gemina Laboratories and BlueScope Steel

-0.7

Correlation Coefficient

Gemina Laboratories  BlueScope Steel

Excellent diversification

The 3 months correlation between Gemina and BlueScope is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Gemina Laboratories 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 Gemina Laboratories 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 Gemina Laboratories i.e., Gemina Laboratories and BlueScope Steel go up and down completely randomly.

Pair Corralation between Gemina Laboratories and BlueScope Steel

Assuming the 90 days horizon Gemina Laboratories is expected to generate 4.39 times more return on investment than BlueScope Steel. However, Gemina Laboratories is 4.39 times more volatile than BlueScope Steel Limited. It trades about 0.21 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about -0.15 per unit of risk. If you would invest  24.00  in Gemina Laboratories on October 23, 2024 and sell it today you would earn a total of  31.00  from holding Gemina Laboratories or generate 129.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Gemina Laboratories  vs.  BlueScope Steel Limited

Gemina Laboratories

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Gemina Laboratories reported solid returns over the last few months and may actually be approaching a breakup point.

BlueScope Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlueScope Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gemina Laboratories and BlueScope Steel

The main advantage of trading using opposite Gemina Laboratories and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemina Laboratories 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 Gemina Laboratories and BlueScope Steel Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.