Correlation Between BLUESCOPE STEEL and ITOCHU

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

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

Diversification Opportunities for BLUESCOPE STEEL and ITOCHU

0.85

Correlation Coefficient

BLUESCOPE STEEL  ITOCHU

Very poor diversification

The 3 months correlation between BLUESCOPE and ITOCHU is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and ITOCHU go up and down completely randomly.

Pair Corralation between BLUESCOPE STEEL and ITOCHU

Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 1.57 times less return on investment than ITOCHU. In addition to that, BLUESCOPE STEEL is 1.7 times more volatile than ITOCHU. It trades about 0.03 of its total potential returns per unit of risk. ITOCHU is currently generating about 0.07 per unit of volatility. If you would invest  4,210  in ITOCHU on April 2, 2025 and sell it today you would earn a total of  301.00  from holding ITOCHU or generate 7.15% return on investment over 90 days.

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

BLUESCOPE STEEL  vs.  ITOCHU

BLUESCOPE STEEL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BLUESCOPE STEEL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BLUESCOPE STEEL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ITOCHU

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITOCHU are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ITOCHU may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BLUESCOPE STEEL and ITOCHU

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

The idea behind BLUESCOPE STEEL and ITOCHU 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.