Correlation Between BHP Group and Boliden AB
Can any of the company-specific risk be diversified away by investing in both BHP Group and Boliden AB 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 Boliden AB 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 Boliden AB, you can compare the effects of market volatilities on BHP Group and Boliden AB 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 Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Boliden AB.
Diversification Opportunities for BHP Group and Boliden AB
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BHP and Boliden is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB 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 Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of BHP Group i.e., BHP Group and Boliden AB go up and down completely randomly.
Pair Corralation between BHP Group and Boliden AB
Considering the 90-day investment horizon BHP Group Limited is expected to under-perform the Boliden AB. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 5.31 times less risky than Boliden AB. The stock trades about -0.01 of its potential returns per unit of risk. The Boliden AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,799 in Boliden AB on August 28, 2024 and sell it today you would earn a total of 1,666 from holding Boliden AB or generate 92.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 28.57% |
| Values | Daily Returns |
BHP Group Limited vs. Boliden AB
Performance |
| Timeline |
| BHP Group Limited |
| Boliden AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BHP Group and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Boliden AB
The main advantage of trading using opposite BHP Group and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Boliden AB 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 Boliden AB will offset losses from the drop in Boliden AB's long position.| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
| Boliden AB vs. Avarone Metals | Boliden AB vs. Aurelia Metals Limited | Boliden AB vs. Adriatic Metals PLC | Boliden AB vs. Huntsman Exploration |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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