Correlation Between BHP Group and GEO JS
Can any of the company-specific risk be diversified away by investing in both BHP Group and GEO JS 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 GEO JS 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 GEO JS Tech, you can compare the effects of market volatilities on BHP Group and GEO JS 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 GEO JS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and GEO JS.
Diversification Opportunities for BHP Group and GEO JS
Very weak diversification
The 3 months correlation between BHP and GEO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and GEO JS Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEO JS Tech 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 GEO JS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEO JS Tech has no effect on the direction of BHP Group i.e., BHP Group and GEO JS go up and down completely randomly.
Pair Corralation between BHP Group and GEO JS
Considering the 90-day investment horizon BHP Group Limited is expected to generate 0.29 times more return on investment than GEO JS. However, BHP Group Limited is 3.4 times less risky than GEO JS. It trades about 0.01 of its potential returns per unit of risk. GEO JS Tech is currently generating about -0.16 per unit of risk. If you would invest 5,232 in BHP Group Limited on September 14, 2024 and sell it today you would earn a total of 13.00 from holding BHP Group Limited or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BHP Group Limited vs. GEO JS Tech
Performance |
| Timeline |
| BHP Group Limited |
| GEO JS Tech |
BHP Group and GEO JS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and GEO JS
The main advantage of trading using opposite BHP Group and GEO JS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, GEO JS 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 GEO JS will offset losses from the drop in GEO JS'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 |
| GEO JS vs. Garibaldi Resources Corp | GEO JS vs. Northern Dynasty Minerals | GEO JS vs. Asia Broadband | GEO JS vs. Avarone Metals |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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