Correlation Between BHP Group and Transportadora
Can any of the company-specific risk be diversified away by investing in both BHP Group and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on BHP Group and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Transportadora.
Diversification Opportunities for BHP Group and Transportadora
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and Transportadora is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of BHP Group i.e., BHP Group and Transportadora go up and down completely randomly.
Pair Corralation between BHP Group and Transportadora
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 1.22 times less risky than Transportadora. The stock trades about -0.11 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 523,000 in Transportadora de Gas on September 12, 2024 and sell it today you would earn a total of 128,000 from holding Transportadora de Gas or generate 24.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Transportadora de Gas
Performance |
| Timeline |
| BHP Group Limited |
| Transportadora de Gas |
BHP Group and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Transportadora
The main advantage of trading using opposite BHP Group and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| BHP Group vs. Compania de Transporte | BHP Group vs. Agrometal SAI | BHP Group vs. Transportadora de Gas | BHP Group vs. Harmony Gold Mining |
| Transportadora vs. Telecom Argentina | Transportadora vs. Compania de Transporte | Transportadora vs. Harmony Gold Mining | Transportadora vs. Agrometal SAI |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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