Correlation Between BHP Group and Callinex Mines
Can any of the company-specific risk be diversified away by investing in both BHP Group and Callinex Mines 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 Callinex Mines 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 Callinex Mines, you can compare the effects of market volatilities on BHP Group and Callinex Mines 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 Callinex Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Callinex Mines.
Diversification Opportunities for BHP Group and Callinex Mines
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BHP and Callinex is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Callinex Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callinex Mines 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 Callinex Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callinex Mines has no effect on the direction of BHP Group i.e., BHP Group and Callinex Mines go up and down completely randomly.
Pair Corralation between BHP Group and Callinex Mines
Assuming the 90 days horizon BHP Group Limited is expected to generate 1.38 times more return on investment than Callinex Mines. However, BHP Group is 1.38 times more volatile than Callinex Mines. It trades about -0.08 of its potential returns per unit of risk. Callinex Mines is currently generating about -0.21 per unit of risk. If you would invest 2,628 in BHP Group Limited on November 5, 2024 and sell it today you would lose (191.00) from holding BHP Group Limited or give up 7.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Callinex Mines
Performance |
| Timeline |
| BHP Group Limited |
| Callinex Mines |
BHP Group and Callinex Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Callinex Mines
The main advantage of trading using opposite BHP Group and Callinex Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Callinex Mines 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 Callinex Mines will offset losses from the drop in Callinex Mines' long position.| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
| Callinex Mines vs. West Mining Corp | Callinex Mines vs. Flying Nickel Mining | Callinex Mines vs. Forum Energy Metals | Callinex Mines vs. Jourdan Resources |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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