Correlation Between BHP Group and Pro Medicus
Can any of the company-specific risk be diversified away by investing in both BHP Group and Pro Medicus 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 Pro Medicus 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 Pro Medicus, you can compare the effects of market volatilities on BHP Group and Pro Medicus 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 Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Pro Medicus.
Diversification Opportunities for BHP Group and Pro Medicus
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and Pro is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus 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 Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of BHP Group i.e., BHP Group and Pro Medicus go up and down completely randomly.
Pair Corralation between BHP Group and Pro Medicus
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Pro Medicus. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 1.9 times less risky than Pro Medicus. The stock trades about -0.03 of its potential returns per unit of risk. The Pro Medicus is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 10,039 in Pro Medicus on October 20, 2024 and sell it today you would earn a total of 14,831 from holding Pro Medicus or generate 147.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Pro Medicus
Performance |
| Timeline |
| BHP Group Limited |
| Pro Medicus |
BHP Group and Pro Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Pro Medicus
The main advantage of trading using opposite BHP Group and Pro Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Pro Medicus 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 Pro Medicus will offset losses from the drop in Pro Medicus' long position.| BHP Group vs. Step One Clothing | BHP Group vs. Hotel Property Investments | BHP Group vs. Collins Foods | BHP Group vs. Southern Cross Media |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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