Correlation Between BHP Group and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both BHP Group and Trematon Capital 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 BHP Group and Trematon Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Trematon Capital Investments, you can compare the effects of market volatilities on BHP Group and Trematon Capital 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 BHP Group with a short position of Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Trematon Capital.
Diversification Opportunities for BHP Group and Trematon Capital
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHP and Trematon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv and BHP Group 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 BHP Group Limited are associated (or correlated) with Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of BHP Group i.e., BHP Group and Trematon Capital go up and down completely randomly.
Pair Corralation between BHP Group and Trematon Capital
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.62 times more return on investment than Trematon Capital. However, BHP Group Limited is 1.62 times less risky than Trematon Capital. It trades about -0.04 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about -0.26 per unit of risk. If you would invest 4,826,400 in BHP Group Limited on September 12, 2024 and sell it today you would lose (64,400) from holding BHP Group Limited or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Trematon Capital Investments
Performance |
| Timeline |
| BHP Group Limited |
| Trematon Capital Inv |
BHP Group and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Trematon Capital
The main advantage of trading using opposite BHP Group and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital's long position.| BHP Group vs. Safari Investments RSA | BHP Group vs. Astoria Investments | BHP Group vs. City Lodge Hotels | BHP Group vs. Bytes Technology |
| Trematon Capital vs. Sasol Ltd Bee | Trematon Capital vs. Centaur Bci Balanced | Trematon Capital vs. Growthpoint Properties | Trematon Capital vs. Coronation Global Equity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |