Correlation Between BHP Group and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both BHP Group and Agrometal SAI 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 Agrometal SAI 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 Agrometal SAI, you can compare the effects of market volatilities on BHP Group and Agrometal SAI 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 Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Agrometal SAI.
Diversification Opportunities for BHP Group and Agrometal SAI
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and Agrometal is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI 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 Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of BHP Group i.e., BHP Group and Agrometal SAI go up and down completely randomly.
Pair Corralation between BHP Group and Agrometal SAI
Assuming the 90 days trading horizon BHP Group is expected to generate 12.72 times less return on investment than Agrometal SAI. But when comparing it to its historical volatility, BHP Group Limited is 1.6 times less risky than Agrometal SAI. It trades about 0.01 of its potential returns per unit of risk. Agrometal SAI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,675 in Agrometal SAI on September 15, 2024 and sell it today you would earn a total of 4,605 from holding Agrometal SAI or generate 172.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
BHP Group Limited vs. Agrometal SAI
Performance |
| Timeline |
| BHP Group Limited |
| Agrometal SAI |
BHP Group and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Agrometal SAI
The main advantage of trading using opposite BHP Group and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Agrometal SAI 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 Agrometal SAI will offset losses from the drop in Agrometal SAI's long position.| BHP Group vs. Agrometal SAI | BHP Group vs. Harmony Gold Mining | BHP Group vs. Compania de Transporte | BHP Group vs. Telecom Argentina |
| Agrometal SAI vs. American Express Co | Agrometal SAI vs. QUALCOMM Incorporated | Agrometal SAI vs. United States Steel | Agrometal SAI vs. Pfizer Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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