Correlation Between BHP Group and Atomos
Can any of the company-specific risk be diversified away by investing in both BHP Group and Atomos 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 Atomos 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 Atomos, you can compare the effects of market volatilities on BHP Group and Atomos 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 Atomos. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Atomos.
Diversification Opportunities for BHP Group and Atomos
Very weak diversification
The 3 months correlation between BHP and Atomos is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Atomos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atomos 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 Atomos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atomos has no effect on the direction of BHP Group i.e., BHP Group and Atomos go up and down completely randomly.
Pair Corralation between BHP Group and Atomos
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.11 times more return on investment than Atomos. However, BHP Group Limited is 8.99 times less risky than Atomos. It trades about 0.13 of its potential returns per unit of risk. Atomos is currently generating about -0.39 per unit of risk. If you would invest 4,090 in BHP Group Limited on September 13, 2024 and sell it today you would earn a total of 110.00 from holding BHP Group Limited or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Atomos
Performance |
| Timeline |
| BHP Group Limited |
| Atomos |
BHP Group and Atomos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Atomos
The main advantage of trading using opposite BHP Group and Atomos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Atomos 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 Atomos will offset losses from the drop in Atomos' long position.| BHP Group vs. Ramsay Health Care | BHP Group vs. Black Rock Mining | BHP Group vs. Aurelia Metals | BHP Group vs. Health and Plant |
| Atomos vs. Regis Healthcare | Atomos vs. Pinnacle Investment Management | Atomos vs. Ramsay Health Care | Atomos vs. Regal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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