Correlation Between BlueScope Steel and CMBTECH NV

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

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

Diversification Opportunities for BlueScope Steel and CMBTECH NV

-0.23

Correlation Coefficient

BlueScope Steel  CMBTECH NV

Very good diversification

The 3 months correlation between BlueScope and CMBTECH is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Ltd and CMBTECH NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMBTECH NV 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 Ltd are associated (or correlated) with CMBTECH NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMBTECH NV has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and CMBTECH NV go up and down completely randomly.

Pair Corralation between BlueScope Steel and CMBTECH NV

Assuming the 90 days horizon BlueScope Steel Ltd is expected to generate 1.14 times more return on investment than CMBTECH NV. However, BlueScope Steel is 1.14 times more volatile than CMBTECH NV. It trades about 0.03 of its potential returns per unit of risk. CMBTECH NV is currently generating about -0.07 per unit of risk. If you would invest  7,645  in BlueScope Steel Ltd on May 19, 2025 and sell it today you would earn a total of  205.00  from holding BlueScope Steel Ltd or generate 2.68% return on investment over 90 days.

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

BlueScope Steel Ltd  vs.  CMBTECH NV

BlueScope Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlueScope Steel Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, BlueScope Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CMBTECH NV

Risk-Adjusted Performance

Weakest

Over the last 90 days CMBTECH NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BlueScope Steel and CMBTECH NV

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

The idea behind BlueScope Steel Ltd and CMBTECH NV 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.