Correlation Between TAMBANG BATUBARA-B- and BLUESCOPE STEEL

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

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

Diversification Opportunities for TAMBANG BATUBARA-B- and BLUESCOPE STEEL

0.77

Correlation Coefficient

TAMBANG BATUBARA-B-  BLUESCOPE STEEL

Poor diversification

The 3 months correlation between TAMBANG and BLUESCOPE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TAMBANG BATUBARA B and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL and TAMBANG BATUBARA-B- 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 TAMBANG BATUBARA B 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 TAMBANG BATUBARA-B- i.e., TAMBANG BATUBARA-B- and BLUESCOPE STEEL go up and down completely randomly.

Pair Corralation between TAMBANG BATUBARA-B- and BLUESCOPE STEEL

Assuming the 90 days trading horizon TAMBANG BATUBARA B is expected to generate 1.04 times more return on investment than BLUESCOPE STEEL. However, TAMBANG BATUBARA-B- is 1.04 times more volatile than BLUESCOPE STEEL. It trades about 0.16 of its potential returns per unit of risk. BLUESCOPE STEEL is currently generating about 0.12 per unit of risk. If you would invest  11.00  in TAMBANG BATUBARA B on April 7, 2025 and sell it today you would earn a total of  3.00  from holding TAMBANG BATUBARA B or generate 27.27% return on investment over 90 days.

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

TAMBANG BATUBARA B   vs.  BLUESCOPE STEEL

TAMBANG BATUBARA-B-

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TAMBANG BATUBARA B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TAMBANG BATUBARA-B- unveiled solid returns over the last few months and may actually be approaching a breakup point.

BLUESCOPE STEEL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BLUESCOPE STEEL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BLUESCOPE STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAMBANG BATUBARA-B- and BLUESCOPE STEEL

The main advantage of trading using opposite TAMBANG BATUBARA-B- and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAMBANG BATUBARA-B- 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 TAMBANG BATUBARA B 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 CEOs Directory module to screen CEOs from public companies around the world.