Correlation Between BHP Group and Nine Entertainment
Can any of the company-specific risk be diversified away by investing in both BHP Group and Nine Entertainment 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 Nine Entertainment 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 Nine Entertainment Co, you can compare the effects of market volatilities on BHP Group and Nine Entertainment 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 Nine Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Nine Entertainment.
Diversification Opportunities for BHP Group and Nine Entertainment
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHP and Nine is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Nine Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Entertainment 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 Nine Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Entertainment has no effect on the direction of BHP Group i.e., BHP Group and Nine Entertainment go up and down completely randomly.
Pair Corralation between BHP Group and Nine Entertainment
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.78 times more return on investment than Nine Entertainment. However, BHP Group Limited is 1.28 times less risky than Nine Entertainment. It trades about 0.0 of its potential returns per unit of risk. Nine Entertainment Co is currently generating about -0.05 per unit of risk. If you would invest 4,123 in BHP Group Limited on September 1, 2024 and sell it today you would lose (66.00) from holding BHP Group Limited or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Nine Entertainment Co
Performance |
| Timeline |
| BHP Group Limited |
| Nine Entertainment |
BHP Group and Nine Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Nine Entertainment
The main advantage of trading using opposite BHP Group and Nine Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Nine Entertainment 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 Nine Entertainment will offset losses from the drop in Nine Entertainment'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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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