Correlation Between BHP Group and Havilah Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Havilah 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 Havilah 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 Havilah Resources, you can compare the effects of market volatilities on BHP Group and Havilah 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 Havilah Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Havilah Resources.
Diversification Opportunities for BHP Group and Havilah Resources
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Havilah is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Havilah Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havilah 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 Havilah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havilah Resources has no effect on the direction of BHP Group i.e., BHP Group and Havilah Resources go up and down completely randomly.
Pair Corralation between BHP Group and Havilah Resources
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Havilah Resources. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 3.22 times less risky than Havilah Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Havilah Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Havilah Resources on August 28, 2024 and sell it today you would lose (2.00) from holding Havilah Resources or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
BHP Group Limited vs. Havilah Resources
Performance |
| Timeline |
| BHP Group Limited |
| Havilah Resources |
BHP Group and Havilah Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Havilah Resources
The main advantage of trading using opposite BHP Group and Havilah Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Havilah 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 Havilah Resources will offset losses from the drop in Havilah Resources' long position.| BHP Group vs. Clime Investment Management | BHP Group vs. Mach7 Technologies | BHP Group vs. Air New Zealand | BHP Group vs. K2 Asset Management |
| Havilah Resources vs. Northern Star Resources | Havilah Resources vs. Evolution Mining | Havilah Resources vs. Bluescope Steel | Havilah Resources vs. Sandfire Resources NL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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