Correlation Between BHP Group and Akora Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Akora Resources 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 Akora Resources 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 Akora Resources, you can compare the effects of market volatilities on BHP Group and Akora Resources 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 Akora Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Akora Resources.
Diversification Opportunities for BHP Group and Akora Resources
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Akora is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Akora Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akora Resources 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 Akora Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akora Resources has no effect on the direction of BHP Group i.e., BHP Group and Akora Resources go up and down completely randomly.
Pair Corralation between BHP Group and Akora Resources
Assuming the 90 days trading horizon BHP Group is expected to generate 15.12 times less return on investment than Akora Resources. But when comparing it to its historical volatility, BHP Group Limited is 4.41 times less risky than Akora Resources. It trades about 0.0 of its potential returns per unit of risk. Akora Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Akora Resources on September 3, 2024 and sell it today you would lose (6.00) from holding Akora Resources or give up 35.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Akora Resources
Performance |
| Timeline |
| BHP Group Limited |
| Akora Resources |
BHP Group and Akora Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Akora Resources
The main advantage of trading using opposite BHP Group and Akora Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Akora Resources 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 Akora Resources will offset losses from the drop in Akora Resources' long position.| BHP Group vs. Stelar Metals | BHP Group vs. Alternative Investment Trust | BHP Group vs. Strickland Metals | BHP Group vs. Group 6 Metals |
| Akora Resources vs. Steamships Trading | Akora Resources vs. Pinnacle Investment Management | Akora Resources vs. Argo Investments | Akora Resources vs. Sandon Capital Investments |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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