Correlation Between BHP Group and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both BHP Group and TPG Telecom 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 TPG Telecom 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 TPG Telecom, you can compare the effects of market volatilities on BHP Group and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and TPG Telecom.
Diversification Opportunities for BHP Group and TPG Telecom
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BHP and TPG is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of BHP Group i.e., BHP Group and TPG Telecom go up and down completely randomly.
Pair Corralation between BHP Group and TPG Telecom
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the TPG Telecom. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 1.12 times less risky than TPG Telecom. The stock trades about -0.11 of its potential returns per unit of risk. The TPG Telecom is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 453.00 in TPG Telecom on November 6, 2024 and sell it today you would lose (23.00) from holding TPG Telecom or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. TPG Telecom
Performance |
| Timeline |
| BHP Group Limited |
| TPG Telecom |
BHP Group and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and TPG Telecom
The main advantage of trading using opposite BHP Group and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.| BHP Group vs. Queste Communications | BHP Group vs. MetalsGrove Mining | BHP Group vs. Metro Mining | BHP Group vs. My Foodie Box |
| TPG Telecom vs. MetalsGrove Mining | TPG Telecom vs. 29Metals | TPG Telecom vs. Charter Hall Retail | TPG Telecom vs. Collins Foods |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |