Correlation Between BHPA and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both BHPA and Canaf Investments 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 BHPA and Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHPA Inc and Canaf Investments, you can compare the effects of market volatilities on BHPA and Canaf Investments 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 BHPA with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHPA and Canaf Investments.
Diversification Opportunities for BHPA and Canaf Investments
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHPA and Canaf is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and BHPA 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 BHPA Inc are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of BHPA i.e., BHPA and Canaf Investments go up and down completely randomly.
Pair Corralation between BHPA and Canaf Investments
Given the investment horizon of 90 days BHPA Inc is not expected to generate positive returns. Moreover, BHPA is 9.33 times more volatile than Canaf Investments. It trades away all of its potential returns to assume current level of volatility. Canaf Investments is currently generating about 0.31 per unit of risk. If you would invest 21.00 in Canaf Investments on November 4, 2024 and sell it today you would earn a total of 3.00 from holding Canaf Investments or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHPA Inc vs. Canaf Investments
Performance |
| Timeline |
| BHPA Inc |
| Canaf Investments |
BHPA and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHPA and Canaf Investments
The main advantage of trading using opposite BHPA and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHPA position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.The idea behind BHPA Inc and Canaf Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |