Correlation Between BHP Group and Dycasa SA
Can any of the company-specific risk be diversified away by investing in both BHP Group and Dycasa SA 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 Dycasa SA 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 Dycasa SA, you can compare the effects of market volatilities on BHP Group and Dycasa SA 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 Dycasa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Dycasa SA.
Diversification Opportunities for BHP Group and Dycasa SA
Pay attention - limited upside
The 3 months correlation between BHP and Dycasa is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Dycasa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycasa SA 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 Dycasa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycasa SA has no effect on the direction of BHP Group i.e., BHP Group and Dycasa SA go up and down completely randomly.
Pair Corralation between BHP Group and Dycasa SA
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Dycasa SA. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 2.31 times less risky than Dycasa SA. The stock trades about -0.36 of its potential returns per unit of risk. The Dycasa SA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 77,000 in Dycasa SA on August 30, 2024 and sell it today you would earn a total of 18,100 from holding Dycasa SA or generate 23.51% 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. Dycasa SA
Performance |
| Timeline |
| BHP Group Limited |
| Dycasa SA |
BHP Group and Dycasa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Dycasa SA
The main advantage of trading using opposite BHP Group and Dycasa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Dycasa SA 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 Dycasa SA will offset losses from the drop in Dycasa SA's long position.| BHP Group vs. Compania de Transporte | BHP Group vs. Agrometal SAI | BHP Group vs. United States Steel | BHP Group vs. Transportadora de Gas |
| Dycasa SA vs. Edesa Holding SA | Dycasa SA vs. Longvie SA | Dycasa SA vs. Vista Energy, SAB | Dycasa SA vs. Embotelladora Andina SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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