Correlation Between BHP Group and Salazar Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Salazar 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 Salazar 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 Salazar Resources Limited, you can compare the effects of market volatilities on BHP Group and Salazar 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 Salazar Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Salazar Resources.
Diversification Opportunities for BHP Group and Salazar Resources
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHP and Salazar is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Salazar Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salazar 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 Salazar Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salazar Resources has no effect on the direction of BHP Group i.e., BHP Group and Salazar Resources go up and down completely randomly.
Pair Corralation between BHP Group and Salazar Resources
Assuming the 90 days horizon BHP Group Limited is expected to under-perform the Salazar Resources. In addition to that, BHP Group is 1.21 times more volatile than Salazar Resources Limited. It trades about -0.07 of its total potential returns per unit of risk. Salazar Resources Limited is currently generating about -0.02 per unit of volatility. If you would invest 6.00 in Salazar Resources Limited on August 28, 2024 and sell it today you would lose (0.36) from holding Salazar Resources Limited or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Salazar Resources Limited
Performance |
| Timeline |
| BHP Group Limited |
| Salazar Resources |
BHP Group and Salazar Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Salazar Resources
The main advantage of trading using opposite BHP Group and Salazar Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Salazar 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 Salazar Resources will offset losses from the drop in Salazar Resources' long position.| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |