Correlation Between INSURANCE AUST and BLUESCOPE STEEL

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

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

Diversification Opportunities for INSURANCE AUST and BLUESCOPE STEEL

-0.54

Correlation Coefficient

INSURANCE AUST  BLUESCOPE STEEL

Excellent diversification

The 3 months correlation between INSURANCE and BLUESCOPE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL and INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and BLUESCOPE STEEL go up and down completely randomly.

Pair Corralation between INSURANCE AUST and BLUESCOPE STEEL

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.81 times more return on investment than BLUESCOPE STEEL. However, INSURANCE AUST GRP is 1.23 times less risky than BLUESCOPE STEEL. It trades about 0.08 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about 0.03 per unit of risk. If you would invest  272.00  in INSURANCE AUST GRP on December 2, 2024 and sell it today you would earn a total of  194.00  from holding INSURANCE AUST GRP or generate 71.32% return on investment over 90 days.

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

INSURANCE AUST GRP  vs.  BLUESCOPE STEEL

INSURANCE AUST GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days INSURANCE AUST GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

BLUESCOPE STEEL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BLUESCOPE STEEL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BLUESCOPE STEEL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with INSURANCE AUST and BLUESCOPE STEEL

The main advantage of trading using opposite INSURANCE AUST and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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 INSURANCE AUST GRP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.