Correlation Between BHP Group and Infomedia
Can any of the company-specific risk be diversified away by investing in both BHP Group and Infomedia 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 Infomedia 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 Infomedia, you can compare the effects of market volatilities on BHP Group and Infomedia 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 Infomedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Infomedia.
Diversification Opportunities for BHP Group and Infomedia
Average diversification
The 3 months correlation between BHP and Infomedia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia 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 Infomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia has no effect on the direction of BHP Group i.e., BHP Group and Infomedia go up and down completely randomly.
Pair Corralation between BHP Group and Infomedia
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.38 times more return on investment than Infomedia. However, BHP Group Limited is 2.65 times less risky than Infomedia. It trades about 0.0 of its potential returns per unit of risk. Infomedia is currently generating about -0.07 per unit of risk. If you would invest 3,996 in BHP Group Limited on November 3, 2024 and sell it today you would lose (1.00) from holding BHP Group Limited or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Infomedia
Performance |
| Timeline |
| BHP Group Limited |
| Infomedia |
BHP Group and Infomedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Infomedia
The main advantage of trading using opposite BHP Group and Infomedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Infomedia 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 Infomedia will offset losses from the drop in Infomedia's long position.| BHP Group vs. Auctus Alternative Investments | BHP Group vs. Oneview Healthcare PLC | BHP Group vs. A1 Investments Resources | BHP Group vs. Carlton Investments |
| Infomedia vs. Collins Foods | Infomedia vs. Charter Hall Retail | Infomedia vs. Pure Foods Tasmania | Infomedia vs. Autosports Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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