Correlation Between BlueScope Steel and CLUB DE

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

By analyzing existing cross correlation between BlueScope Steel Limited and CLUB DE FUTBINTERC, you can compare the effects of market volatilities on BlueScope Steel and CLUB DE 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 CLUB DE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and CLUB DE.

Diversification Opportunities for BlueScope Steel and CLUB DE

0.1

Correlation Coefficient

BlueScope Steel  CLUB DE

Average diversification

The 3 months correlation between BlueScope and CLUB is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and CLUB DE FUTBINTERC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLUB DE FUTBINTERC 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 Limited are associated (or correlated) with CLUB DE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLUB DE FUTBINTERC has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and CLUB DE go up and down completely randomly.

Pair Corralation between BlueScope Steel and CLUB DE

Assuming the 90 days horizon BlueScope Steel Limited is expected to under-perform the CLUB DE. But the stock apears to be less risky and, when comparing its historical volatility, BlueScope Steel Limited is 6.09 times less risky than CLUB DE. The stock trades about -0.02 of its potential returns per unit of risk. The CLUB DE FUTBINTERC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  59.00  in CLUB DE FUTBINTERC on September 25, 2024 and sell it today you would lose (29.00) from holding CLUB DE FUTBINTERC or give up 49.15% of portfolio value over 90 days.

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

BlueScope Steel Limited  vs.  CLUB DE FUTBINTERC

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CLUB DE FUTBINTERC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLUB DE FUTBINTERC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, CLUB DE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BlueScope Steel and CLUB DE

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

The idea behind BlueScope Steel Limited and CLUB DE FUTBINTERC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.