Correlation Between BHPA and Fernhill Corp
Can any of the company-specific risk be diversified away by investing in both BHPA and Fernhill Corp 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 Fernhill Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHPA Inc and Fernhill Corp, you can compare the effects of market volatilities on BHPA and Fernhill Corp 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 Fernhill Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHPA and Fernhill Corp.
Diversification Opportunities for BHPA and Fernhill Corp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHPA and Fernhill is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and Fernhill Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fernhill Corp 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 Fernhill Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fernhill Corp has no effect on the direction of BHPA i.e., BHPA and Fernhill Corp go up and down completely randomly.
Pair Corralation between BHPA and Fernhill Corp
Given the investment horizon of 90 days BHPA Inc is expected to under-perform the Fernhill Corp. In addition to that, BHPA is 1.18 times more volatile than Fernhill Corp. It trades about -0.01 of its total potential returns per unit of risk. Fernhill Corp is currently generating about 0.05 per unit of volatility. If you would invest 0.12 in Fernhill Corp on October 26, 2024 and sell it today you would earn a total of 0.00 from holding Fernhill Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
BHPA Inc vs. Fernhill Corp
Performance |
| Timeline |
| BHPA Inc |
| Fernhill Corp |
BHPA and Fernhill Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHPA and Fernhill Corp
The main advantage of trading using opposite BHPA and Fernhill Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHPA position performs unexpectedly, Fernhill Corp 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 Fernhill Corp will offset losses from the drop in Fernhill Corp's long position.The idea behind BHPA Inc and Fernhill Corp 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.| Fernhill Corp vs. Protek Capital | Fernhill Corp vs. On4 Communications | Fernhill Corp vs. Bowmo Inc | Fernhill Corp vs. BHPA Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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