Correlation Between BHP Group and Mach7 Technologies
Can any of the company-specific risk be diversified away by investing in both BHP Group and Mach7 Technologies 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 Mach7 Technologies 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 Mach7 Technologies, you can compare the effects of market volatilities on BHP Group and Mach7 Technologies 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 Mach7 Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Mach7 Technologies.
Diversification Opportunities for BHP Group and Mach7 Technologies
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BHP and Mach7 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Mach7 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach7 Technologies 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 Mach7 Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach7 Technologies has no effect on the direction of BHP Group i.e., BHP Group and Mach7 Technologies go up and down completely randomly.
Pair Corralation between BHP Group and Mach7 Technologies
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.33 times more return on investment than Mach7 Technologies. However, BHP Group Limited is 3.02 times less risky than Mach7 Technologies. It trades about -0.18 of its potential returns per unit of risk. Mach7 Technologies is currently generating about -0.2 per unit of risk. If you would invest 4,260 in BHP Group Limited on September 5, 2024 and sell it today you would lose (194.00) from holding BHP Group Limited or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BHP Group Limited vs. Mach7 Technologies
Performance |
| Timeline |
| BHP Group Limited |
| Mach7 Technologies |
BHP Group and Mach7 Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Mach7 Technologies
The main advantage of trading using opposite BHP Group and Mach7 Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Mach7 Technologies 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 Mach7 Technologies will offset losses from the drop in Mach7 Technologies' long position.| BHP Group vs. Computershare | BHP Group vs. Bell Financial Group | BHP Group vs. Westpac Banking | BHP Group vs. Hutchison Telecommunications |
| Mach7 Technologies vs. Aneka Tambang Tbk | Mach7 Technologies vs. BHP Group Limited | Mach7 Technologies vs. Commonwealth Bank of | Mach7 Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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