Correlation Between BHP Group and Zacapa Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Zacapa 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 Zacapa 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 Zacapa Resources, you can compare the effects of market volatilities on BHP Group and Zacapa 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 Zacapa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Zacapa Resources.
Diversification Opportunities for BHP Group and Zacapa Resources
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BHP and Zacapa is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Zacapa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacapa 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 Zacapa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacapa Resources has no effect on the direction of BHP Group i.e., BHP Group and Zacapa Resources go up and down completely randomly.
Pair Corralation between BHP Group and Zacapa Resources
If you would invest 3.23 in Zacapa Resources on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Zacapa Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
BHP Group Limited vs. Zacapa Resources
Performance |
| Timeline |
| BHP Group Limited |
| Zacapa Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BHP Group and Zacapa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Zacapa Resources
The main advantage of trading using opposite BHP Group and Zacapa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Zacapa 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 Zacapa Resources will offset losses from the drop in Zacapa 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 |
| Zacapa Resources vs. Pampa Metals | Zacapa Resources vs. Progressive Planet Solutions | Zacapa Resources vs. Searchlight Resources | Zacapa Resources vs. Durango 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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