Correlation Between BHP Group and Gossan Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Gossan Resources 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 Gossan Resources 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 Gossan Resources, you can compare the effects of market volatilities on BHP Group and Gossan Resources 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 Gossan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Gossan Resources.
Diversification Opportunities for BHP Group and Gossan Resources
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHP and Gossan is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Gossan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossan Resources 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 Gossan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossan Resources has no effect on the direction of BHP Group i.e., BHP Group and Gossan Resources go up and down completely randomly.
Pair Corralation between BHP Group and Gossan Resources
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Gossan Resources. In addition to that, BHP Group is 1.03 times more volatile than Gossan Resources. It trades about -0.03 of its total potential returns per unit of risk. Gossan Resources is currently generating about 0.31 per unit of volatility. If you would invest 1.00 in Gossan Resources on September 19, 2024 and sell it today you would earn a total of 0.10 from holding Gossan Resources or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Gossan Resources
Performance |
| Timeline |
| BHP Group Limited |
| Gossan Resources |
BHP Group and Gossan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Gossan Resources
The main advantage of trading using opposite BHP Group and Gossan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Gossan Resources 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 Gossan Resources will offset losses from the drop in Gossan Resources' long position.| BHP Group vs. SAFETY MEDICAL PROD | BHP Group vs. Apollo Medical Holdings | BHP Group vs. Pembina Pipeline Corp | BHP Group vs. Major Drilling Group |
| Gossan Resources vs. BHP Group Limited | Gossan Resources vs. Vale SA | Gossan Resources vs. Superior Plus Corp | Gossan Resources vs. SIVERS SEMICONDUCTORS AB |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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