Correlation Between BHP Group and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both BHP Group and Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals PLC, you can compare the effects of market volatilities on BHP Group and Adriatic Metals 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 Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Adriatic Metals.
Diversification Opportunities for BHP Group and Adriatic Metals
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BHP and Adriatic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Adriatic Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals PLC 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 Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals PLC has no effect on the direction of BHP Group i.e., BHP Group and Adriatic Metals go up and down completely randomly.
Pair Corralation between BHP Group and Adriatic Metals
Assuming the 90 days horizon BHP Group is expected to generate 2.84 times less return on investment than Adriatic Metals. In addition to that, BHP Group is 1.35 times more volatile than Adriatic Metals PLC. It trades about 0.04 of its total potential returns per unit of risk. Adriatic Metals PLC is currently generating about 0.15 per unit of volatility. If you would invest 200.00 in Adriatic Metals PLC on August 28, 2024 and sell it today you would earn a total of 75.00 from holding Adriatic Metals PLC or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
BHP Group Limited vs. Adriatic Metals PLC
Performance |
| Timeline |
| BHP Group Limited |
| Adriatic Metals PLC |
BHP Group and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Adriatic Metals
The main advantage of trading using opposite BHP Group and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
| Adriatic Metals vs. Huntsman Exploration | Adriatic Metals vs. Aurelia Metals Limited | Adriatic Metals vs. American Helium | Adriatic Metals vs. Progressive Planet Solutions |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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