Correlation Between Home Consortium and Bluescope Steel

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

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

Diversification Opportunities for Home Consortium and Bluescope Steel

-0.32

Correlation Coefficient

Home Consortium  Bluescope Steel

Very good diversification

The 3 months correlation between Home and Bluescope is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Home Consortium and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel and Home Consortium 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 Home Consortium 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 Home Consortium i.e., Home Consortium and Bluescope Steel go up and down completely randomly.

Pair Corralation between Home Consortium and Bluescope Steel

Assuming the 90 days trading horizon Home Consortium is expected to under-perform the Bluescope Steel. In addition to that, Home Consortium is 1.25 times more volatile than Bluescope Steel. It trades about -0.23 of its total potential returns per unit of risk. Bluescope Steel is currently generating about 0.14 per unit of volatility. If you would invest  1,877  in Bluescope Steel on December 30, 2024 and sell it today you would earn a total of  354.00  from holding Bluescope Steel or generate 18.86% return on investment over 90 days.

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

Home Consortium  vs.  Bluescope Steel

Home Consortium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Consortium 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 fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Home Consortium and Bluescope Steel

The main advantage of trading using opposite Home Consortium and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Consortium 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 Home Consortium and Bluescope Steel 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.