Correlation Between Summit Environmental and BlueScope Steel

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

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

Diversification Opportunities for Summit Environmental and BlueScope Steel

0.0

Correlation Coefficient

Summit Environmental  BlueScope Steel

Pay attention - limited upside

The 3 months correlation between Summit and BlueScope is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summit Environmental and BlueScope Steel Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Summit Environmental 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 Summit Environmental 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 Summit Environmental i.e., Summit Environmental and BlueScope Steel go up and down completely randomly.

Pair Corralation between Summit Environmental and BlueScope Steel

If you would invest  6,116  in BlueScope Steel Ltd on February 6, 2025 and sell it today you would earn a total of  868.00  from holding BlueScope Steel Ltd or generate 14.19% return on investment over 90 days.

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

Summit Environmental  vs.  BlueScope Steel Ltd

Summit Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Summit Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Environmental is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BlueScope Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlueScope Steel Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, BlueScope Steel may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Summit Environmental and BlueScope Steel

The main advantage of trading using opposite Summit Environmental and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Environmental 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 Summit Environmental and BlueScope Steel Ltd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.