Correlation Between BHP Group and Harvest Technology
Can any of the company-specific risk be diversified away by investing in both BHP Group and Harvest Technology 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 Harvest Technology 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 Harvest Technology Group, you can compare the effects of market volatilities on BHP Group and Harvest Technology 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 Harvest Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Harvest Technology.
Diversification Opportunities for BHP Group and Harvest Technology
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHP and Harvest is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Harvest Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Technology 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 Harvest Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Technology has no effect on the direction of BHP Group i.e., BHP Group and Harvest Technology go up and down completely randomly.
Pair Corralation between BHP Group and Harvest Technology
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Harvest Technology. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 6.89 times less risky than Harvest Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Harvest Technology Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.20 in Harvest Technology Group on September 1, 2024 and sell it today you would earn a total of 0.70 from holding Harvest Technology Group or generate 31.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Harvest Technology Group
Performance |
| Timeline |
| BHP Group Limited |
| Harvest Technology |
BHP Group and Harvest Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Harvest Technology
The main advantage of trading using opposite BHP Group and Harvest Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Harvest Technology 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 Harvest Technology will offset losses from the drop in Harvest Technology's long position.| BHP Group vs. Infomedia | BHP Group vs. Kneomedia | BHP Group vs. Gold Road Resources | BHP Group vs. Apiam Animal Health |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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