Correlation Between BHP Group and Althea Group
Can any of the company-specific risk be diversified away by investing in both BHP Group and Althea Group 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 Althea Group 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 Althea Group Holdings, you can compare the effects of market volatilities on BHP Group and Althea Group 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 Althea Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Althea Group.
Diversification Opportunities for BHP Group and Althea Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Althea is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Althea Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Althea Group Holdings 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 Althea Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Althea Group Holdings has no effect on the direction of BHP Group i.e., BHP Group and Althea Group go up and down completely randomly.
Pair Corralation between BHP Group and Althea Group
If you would invest 3,959 in BHP Group Limited on October 21, 2024 and sell it today you would earn a total of 46.00 from holding BHP Group Limited or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Althea Group Holdings
Performance |
| Timeline |
| BHP Group Limited |
| Althea Group Holdings |
BHP Group and Althea Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Althea Group
The main advantage of trading using opposite BHP Group and Althea Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Althea Group 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 Althea Group will offset losses from the drop in Althea Group's long position.The idea behind BHP Group Limited and Althea Group Holdings 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.| Althea Group vs. Australian Unity Office | Althea Group vs. Magellan Financial Group | Althea Group vs. K2 Asset Management | Althea Group vs. Platinum Asset Management |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |