Correlation Between BlueScope Steel and CIFI Holdings

Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and CIFI Holdings 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 CIFI Holdings 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 CIFI Holdings Co, you can compare the effects of market volatilities on BlueScope Steel and CIFI Holdings 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 CIFI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and CIFI Holdings.

Diversification Opportunities for BlueScope Steel and CIFI Holdings

0.07

Correlation Coefficient

BlueScope Steel  CIFI Holdings

Significant diversification

The 3 months correlation between BlueScope and CIFI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and CIFI Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIFI Holdings 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 CIFI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIFI Holdings has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and CIFI Holdings go up and down completely randomly.

Pair Corralation between BlueScope Steel and CIFI Holdings

Assuming the 90 days horizon BlueScope Steel is expected to generate 3.87 times less return on investment than CIFI Holdings. But when comparing it to its historical volatility, BlueScope Steel Limited is 5.43 times less risky than CIFI Holdings. It trades about 0.11 of its potential returns per unit of risk. CIFI Holdings Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.05  in CIFI Holdings Co on April 25, 2025 and sell it today you would earn a total of  0.35  from holding CIFI Holdings Co or generate 17.07% return on investment over 90 days.

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

BlueScope Steel Limited  vs.  CIFI Holdings Co

BlueScope Steel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlueScope Steel Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BlueScope Steel may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CIFI Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIFI Holdings Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CIFI Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlueScope Steel and CIFI Holdings

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

The idea behind BlueScope Steel Limited and CIFI Holdings Co 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.