Correlation Between BLUESCOPE STEEL and SCANDMEDICAL SOLDK

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

By analyzing existing cross correlation between BLUESCOPE STEEL and SCANDMEDICAL SOLDK 040, you can compare the effects of market volatilities on BLUESCOPE STEEL and SCANDMEDICAL SOLDK 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 SCANDMEDICAL SOLDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and SCANDMEDICAL SOLDK.

Diversification Opportunities for BLUESCOPE STEEL and SCANDMEDICAL SOLDK

-0.05

Correlation Coefficient

BLUESCOPE STEEL  SCANDMEDICAL SOLDK

Good diversification

The 3 months correlation between BLUESCOPE and SCANDMEDICAL is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and SCANDMEDICAL SOLDK 040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDMEDICAL SOLDK 040 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 are associated (or correlated) with SCANDMEDICAL SOLDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDMEDICAL SOLDK 040 has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and SCANDMEDICAL SOLDK go up and down completely randomly.

Pair Corralation between BLUESCOPE STEEL and SCANDMEDICAL SOLDK

Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 0.81 times more return on investment than SCANDMEDICAL SOLDK. However, BLUESCOPE STEEL is 1.24 times less risky than SCANDMEDICAL SOLDK. It trades about 0.03 of its potential returns per unit of risk. SCANDMEDICAL SOLDK 040 is currently generating about -0.07 per unit of risk. If you would invest  1,310  in BLUESCOPE STEEL on September 12, 2024 and sell it today you would earn a total of  10.00  from holding BLUESCOPE STEEL or generate 0.76% return on investment over 90 days.

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

BLUESCOPE STEEL  vs.  SCANDMEDICAL SOLDK 040

BLUESCOPE STEEL

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BLUESCOPE STEEL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BLUESCOPE STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

SCANDMEDICAL SOLDK 040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCANDMEDICAL SOLDK 040 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SCANDMEDICAL SOLDK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BLUESCOPE STEEL and SCANDMEDICAL SOLDK

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

The idea behind BLUESCOPE STEEL and SCANDMEDICAL SOLDK 040 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.