Correlation Between BHP Group and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both BHP Group and Hutchison Telecommunicatio 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 Hutchison Telecommunicatio 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 Hutchison Telecommunications, you can compare the effects of market volatilities on BHP Group and Hutchison Telecommunicatio 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 Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Hutchison Telecommunicatio.
Diversification Opportunities for BHP Group and Hutchison Telecommunicatio
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BHP and Hutchison is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio 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 Hutchison Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Telecommunicatio has no effect on the direction of BHP Group i.e., BHP Group and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between BHP Group and Hutchison Telecommunicatio
Assuming the 90 days trading horizon BHP Group is expected to generate 1.48 times less return on investment than Hutchison Telecommunicatio. But when comparing it to its historical volatility, BHP Group Limited is 2.69 times less risky than Hutchison Telecommunicatio. It trades about 0.15 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Hutchison Telecommunications on September 14, 2024 and sell it today you would earn a total of 0.10 from holding Hutchison Telecommunications or generate 4.0% 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. Hutchison Telecommunications
Performance |
| Timeline |
| BHP Group Limited |
| Hutchison Telecommunicatio |
BHP Group and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Hutchison Telecommunicatio
The main advantage of trading using opposite BHP Group and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Hutchison Telecommunicatio 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 Hutchison Telecommunicatio will offset losses from the drop in Hutchison Telecommunicatio's long position.| BHP Group vs. Northern Star Resources | BHP Group vs. Evolution Mining | BHP Group vs. Bluescope Steel | BHP Group vs. Sandfire Resources NL |
| Hutchison Telecommunicatio vs. Aneka Tambang Tbk | Hutchison Telecommunicatio vs. BHP Group Limited | Hutchison Telecommunicatio vs. Commonwealth Bank | Hutchison Telecommunicatio vs. Commonwealth Bank of |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |