Correlation Between BHP Group and Sassy Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Sassy 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 Sassy 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 Sassy Resources, you can compare the effects of market volatilities on BHP Group and Sassy 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 Sassy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Sassy Resources.
Diversification Opportunities for BHP Group and Sassy Resources
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BHP and Sassy is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Sassy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sassy 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 Sassy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sassy Resources has no effect on the direction of BHP Group i.e., BHP Group and Sassy Resources go up and down completely randomly.
Pair Corralation between BHP Group and Sassy Resources
Assuming the 90 days horizon BHP Group is expected to generate 15.51 times less return on investment than Sassy Resources. But when comparing it to its historical volatility, BHP Group Limited is 6.04 times less risky than Sassy Resources. It trades about 0.02 of its potential returns per unit of risk. Sassy Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Sassy Resources on August 25, 2024 and sell it today you would lose (50.00) from holding Sassy Resources or give up 87.72% 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. Sassy Resources
Performance |
| Timeline |
| BHP Group Limited |
| Sassy Resources |
BHP Group and Sassy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Sassy Resources
The main advantage of trading using opposite BHP Group and Sassy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Sassy 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 Sassy Resources will offset losses from the drop in Sassy Resources' long position.| BHP Group vs. Norra Metals Corp | BHP Group vs. ZincX Resources Corp | BHP Group vs. Nuinsco Resources Limited | BHP Group vs. South Star Battery |
| Sassy Resources vs. Norra Metals Corp | Sassy Resources vs. ZincX Resources Corp | Sassy Resources vs. Nuinsco Resources Limited | Sassy Resources vs. South Star Battery |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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