Correlation Between Wayside Technology and BLUESCOPE STEEL

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

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

Diversification Opportunities for Wayside Technology and BLUESCOPE STEEL

-0.24

Correlation Coefficient

Wayside Technology  BLUESCOPE STEEL

Very good diversification

The 3 months correlation between Wayside and BLUESCOPE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL and Wayside Technology 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 Wayside Technology Group 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 Wayside Technology i.e., Wayside Technology and BLUESCOPE STEEL go up and down completely randomly.

Pair Corralation between Wayside Technology and BLUESCOPE STEEL

Assuming the 90 days horizon Wayside Technology Group is expected to generate 1.71 times more return on investment than BLUESCOPE STEEL. However, Wayside Technology is 1.71 times more volatile than BLUESCOPE STEEL. It trades about -0.07 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about -0.29 per unit of risk. If you would invest  12,800  in Wayside Technology Group on October 10, 2024 and sell it today you would lose (700.00) from holding Wayside Technology Group or give up 5.47% of portfolio value over 90 days.

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

Wayside Technology Group  vs.  BLUESCOPE STEEL

Wayside Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Wayside Technology 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 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wayside Technology and BLUESCOPE STEEL

The main advantage of trading using opposite Wayside Technology and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology 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 Wayside Technology Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..